Fidel Castro stepped down last week after nearly half a century in charge.

Raul has in effect been president since Fidel had major surgery in July 2006. It is understood that he was the only nominee in a vote seen as a formality.

But the real shock was when he chose 78-year-old Politburo hardliner Machado Ventura as vice-president, says the BBC's Michael Voss in Havana.

There had been speculation that Raul Castro, aged 76, would name one of Cuba's younger generation of communist leaders as his number two.

But he instead opted for one of the original leaders of Cuba's communist revolution.

What this means for the prospects for change remains unclear, our correspondent says.

Economic challenge

In an address to the nation, following the behind-closed-doors vote, Raul Castro said the Cuban government would continue to consult Fidel Castro, 81, on major decisions of state - a move backed by the National Assembly deputies.

Raul Castro paid tribute to his brother as he accepted the presidency saying:

"The commander in chief of the Cuban revolution is unique, Fidel is Fidel, as we all know well, he is irreplaceable."

Our correspondent says Raul Castro now has to steer the Caribbean island through un-charted waters in an unpredictable period of economic and political renewal.

Before Sunday's session, Raul Castro had suggested implementing major economic reforms and "structural changes".

He has worked to ensure a smooth political transition, keeping the army loyal to the regime and strengthening the Communist Party's hold by introducing reforms and weeding out corrupt officials.

He has also had the advantage of continued economic support from Venezuelan President Hugo Chavez in the form of millions of barrels of cheap oil, our correspondent adds.

Letter announcement

Fidel Castro, who has ruled Cuba since leading a revolution in 1959, announced his retirement in a letter published on the website of the Cuban Communist Party's newspaper Granma last week.

He said he had not stepped down after undergoing emergency intestinal surgery in 2006 because he had had a duty to the Cuban people to prepare them for his absence.

But retirement, he added, would not stop him from carrying "on fighting like a soldier of ideas", and he promised to continue writing essays entitled Reflections of Comrade Fidel.

Though he has not been seen in public for 19 months, the government occasionally releases photographs and pre-edited video of him meeting visiting leaders from around the world.