President-elect Barack Obama named former rival Hillary Clinton as secretary of state on Monday and said Robert Gates would remain defense secretary in a national security team charged with recasting America's leadership role in the world.

Clinton and Gates, who have been at odds with Obama in the past over foreign policy and defense issues, will implement Obama's vision of rebuilding the US image abroad while overseeing wars in Iraq and Afghanistan.

Obama played down differences with the woman he narrowly beat for the Democratic presidential nomination and said he would welcome vigorous debate among his opinionated team.

"I assembled this team because I am a strong believer in strong personalities and strong opinions. I think that's how the best decisions are made," Obama said, calling the former first lady a "dear friend."

"I will be responsible for the vision that this team carries out and I expect them to implement that vision once decisions are made," Obama added. "So as Harry Truman said, the buck will stop with me."

On one of the biggest foreign policy issues his administration will face, Obama repeated his belief that US troops could be out of Iraq within 16 months of his taking office, though he said he would consult advisers on that.

Clinton, standing next to her former opponent, said the United States must rely on its friends to help confront threats like global warming and terrorism - an implicit rebuke to the go-it-alone approach of President George W. Bush.

"While we are determined to defend our freedoms and liberties at all costs, we also reach out to the world again, seeking common cause and higher ground," she said.

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