Austria's government should focus on a package of economic and social policies, the country's new Chancellor Christian Kern announced Tuesday, one week after his predecessor stepped down amid growing public support for the far-right Freedom Party.

"Our aim must be to restore faith in the future in this country," the Social Democrat Kern told reporters shortly before President Heinz Fischer swore him in as chancellor.

The coalition government between Social Democrats and the centre-right People's Party should focus on employment, education, the economy and wages, the former chief of Austria's national railways said.

The two centrist coalition parties should work together rather than against each other, 50-year-old Kern said, in a veiled criticism of the People's Party and his predecessor Werner Faymann.

"If we don't realize that this is our last chance, then these two big parties and this government will disappear, and rightly so," Kern warned.

The opposition Freedom Party overtook the coalition party in opinion polls last year.

Since that time, the xenophobic right-wing party has stayed at the top amid surging immigration, rising unemployment and constant bickering between the coalition parties.

This situation has created a rift among the Social Democrats, between those who do not want to rule out a future coalition with the Freedom Party, and those staunchly opposed to such a coalition.

Kern appeared to keep all his options open on Tuesday.

On one hand, he said that "we do not cooperate with parties that stir up hatred against people and minorities."

But on the other, the issue should be tackled at a later time, he said. The Social Democrats should first develop political criteria to guide future decisions on coalition partners.

Kern did not give any indication that he plans to repeal the tough new immigration rules introduced in past months, but said that integration migrants was essential.

"These people are here, and we have to take responsibility for them," he said.

The chancellor reshuffled the government by replacing four cabinet members responsible for infrastructure, education, culture and public administration.

The designated secretary of state for public administration, Muna Duzdar, will be the first cabinet member in Austria with an immigration background.

The lawyer and parliamentarian is the daughter of Palestinian immigrants.

Christian Kern took office less than a week before Sunday's final round of presidential elections, in which Freedom Party candidate Norbert Hofer faces off against former Green party chief Alexander Van der Bellen.

Hofer won the first round in April with more than a third of the votes.

While Van der Bellen has said he would not make Freedom Party leader Heinz-Christian Strache chancellor after the next parliamentary election, a vote for Hofer on Sunday would raise the chances of a government that includes the anti-immigration and anti-EU Freedom Party.

EU president Donald Tusk congratulated Kern on his new office.

"In challenging times like these, the continued constructive contribution of Austria to finding common European solutions and keeping our unity is essential," he wrote in a message, hinting at the divisions that Austria's tough immigration policies have caused.

German Social Democratic leader and Vice Chancellor Sigmar Gabriel said that Europe needed social democratic ideas for growth, social justice and social cohesion, aiming "for a Europe of freedom and democracy that is able to win back people's trust."

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