Budapest - Prime Minister Gordon Bajnai Sunday presented his new government's programme of crisis measures and public spending cuts to steer Hungary out of its economic woes.

Pensions, public sector pay and welfare payments were all cut while value-added tax was increased in an effort to relieve the national budget by the equivalent of 4.4 billion euros.

Bajnai also announced tax relief for lower-income workers in an effort to counter unemployment. "This is a crisis management programme that demands sacrifice by all Hungarians," he warned.

"The aim is to protect jobs, families and small businesses," he said. While "painful", the measures had no alternative. They were approved by the new parliament at what was its second session.

Bajnai was elected to his post by parliament last week in a vote which at the same time expressed no confidence in Ferenc Gyurcsany, voting the socialist premier out of office.

Bajnai, who has no party affiliation, went on to reshuffle the cabinet and bring in experts free of party affiliations to take over the key finance, economy, social welfare and energy ministries.

Acknowledging that his unpopularity had made him an obstacle to reform, Gyurcsany had said he would step aside to make way for an interim government to tackle Hungary's deepening financial crisis.

Bajnai, a wealthy businessman, was nominated following negotiations between the Socialists and the small liberal opposition Free Democrats party.(dpa)