Mr Mandela was speaking at an emotional ceremony in this sleepy town in the volatile KwaZulu- Natal province, held to mark the handing back of more than 600,000 hectares of land to former black owners.
Mr Mandela, who became president in 1994 in the country's first democratic elections, said the Land Reform Programme that his government had enacted in its first year in power would help right the wrongs of the past.
"Our land reform programme helps redress the injustices of apartheid. It fosters national reconciliation and stability," he told a gathering, which included the Zulu King, Goodwill Zwelithini. "It also underpins economic growth and improves household welfare and food security." he added.
The ceremony involved handing back land to about 85 black households, whose land was expropriated by whites during the apartheid era. Up to 25 of the beneficiaries were black women.
Mr Mandela said that his government's land reform, which involves negotiations between the victims of apartheid and the whites who still own most of South Africa's best land, would help create stability by raising living standards.
"The progress we are making in land reform is matched in our efforts to address the poverty that apartheid created," he said.
South Africa's land reform programme contrasts sharply with that of neighbouring Zimbabwe where the government of President Robert Mugabe has given notice that it will expropriate land from white owners without any compensation.
In South Africa, land redistribution is done through the Restitution of Land Rights Act enacted in 1994. This involves buying back land at market value after negotiations between former black owners and white farmers.
Land ownership is one of the most emotive issues in South Africa, where whites make up 13 per cent of the population but control over 70 per cent of the land.
South Africa's parliament passed legislation soon after the first all- race election in 1994 giving thousands of blacks stripped of their land under decades of apartheid three years to claim it back.
About 23,000 cases have already been lodged with the commission, which is overseeing the restitution of land rights.
Statistics show that up to 400,000 hectares of land have been redistributed back to almost a quarter of a million of former black owners.
But the scheme has its critics, who say land redistribution is not moving fast enough and say the government programme must be speeded up if South Africa is to avoid Zimbabwe's problems.
Ground-breaking land tenure protection to shield black farmworkers from arbitrary eviction by landowners also became law in South Africa in November last year.
The farmworkers, who are mostly black, have been one of the most disadvantaged sectors in the country.
Previously, they had no recourse to the law in cases of eviction, even if their families had worked the same farm land for decades.
Mr Mandela's government is not bent on a confrontational approach with white farmers and businessmen. It is also encouraging new black land owners to join in economic partnerships with white businessmen and former land owners.
n AP Johannesburg - A flight from London to Johannesburg has landed Winnie Madikizela-Mandela in trouble. It began at the British Airways first-class check-in counter at Heathrow Airport last week, when Mr Mandela's former wife tried to board a flight with excess baggage.
When she was told she had to pay pounds 1,000 for extra luggage, she said she had only one-third of the money. After arriving in South Africa, she fired off a letter to the airline, saying she had been travelling first-class on a diplomatic passport and had expected better treatment.
After opposition politicians asked why she had such a diplomatic passport the government said Ms Madikizela-Mandela was no longer entitled to such a privilege. It had been issued to her when she was a minister, a post she lost three years ago.