The new Cabinet's first meeting

After the smiles and handshakes around the crowded Cabinet table, the sobering reality of the task facing the new Tory-Liberal Democrat government soon hit home.

David Cameron and Nick Clegg got the business of running the country under way at the inaugural meeting of the first coalition Cabinet since 1945.

All 23 members of the full Cabinet, as well as six other senior ministers entitled to attend its meetings, packed into the room. To their surprise – and breaking with the practice of the previous government – they had been asked to hand over their mobile phones and Blackberries.

The extraordinary make-up of the new team running the country was underlined by the seating arrangement in the Cabinet room.

Mr Cameron, sitting with his back to the fireplace in the only chair with armrests, had William Hague, the Foreign Secretary, to one side and Sir Gus O'Donnell, the Cabinet Secretary, and Vince Cable, the Liberal Democrat deputy leader and Business Secretary, to the other. Mr Clegg sat across the table from the Prime Minister, with the Chancellor, George Osborne, and Kenneth Clarke, the Justice Secretary, to either side of him.

Mr Cameron and Mr Clegg opened the historic session by stressing their parties' shared agenda – and underlining the huge challenges facing their administration at home and abroad.

The new Prime Minister urged his ministers to seize the "extraordinary opportunity" before them and asked them to keep their differences private in the interests of maintaining unity.

If any vestige of triumphalism remained after these remarks, it was swept away by Mr Osborne's warning that Britain's huge budget deficit would overshadow the Government.

Several ministers also acknowledged that their new departments would have to face severe cuts, while Mr Hague led a discussion on the progress of the Afghanistan war. A moment of levity was injected by Dr Cable who said his Indian in-laws had once told him that "arranged marriages often work better than one born out of love".

Warnings of the austerity ahead were brought home as Mr Cameron reminded the Cabinet of the Tory manifesto policy to cut ministerial salaries by 5 per cent and freeze them for the lifetime of the Parliament.

The cuts, which Downing Street said would save the taxpayer £3m over five years, will mean Mr Cameron will be paid £142,500 a year. His Cabinet ministers will receive £134,565, ministers of state £98,740 and parliamentary under-secretaries £89,435.

The new ministers emerged from the 75-minute session insisting on their sense of joint purpose and determination to work together in the national interests.

But Jeremy Hunt, the Culture Secretary, warned: "We are all very aware of the seriousness of the situation. Frankly, if we don't have a credible programme to reduce the deficit ... we won't have the confidence of the world and the confidence of the country."

Inside Downing Street, Mr Cameron addressed civil servants and staff. Referring to the unfamiliar nature of the new administration, he said he had been told his Cabinet would be more unified than in the days of Tony Blair and Gordon Brown. "That isn't setting the bar very high," he added. He then embarked on a tour of his new Whitehall empire, stopping first at the Department for Business, Innovation and Skills, which will be headed by Dr Cable.

He praised his new Liberal Democrat Secretary of State – a former adviser to James Callaghan's Labour government – as an "absolute star".

From there the Prime Minister headed to the Home Office, where he has sent Theresa May as the second female Home Secretary in the department's history. Watched by more than 500 civil servants, he said: "My reason for coming to this department second of all is to point out how important I feel the agenda is in terms of combating crime, keeping us safe, reforming immigration, combating terrorism. These are hugely important tasks."