Mr Balladur, 63, was appointed by Francois Mitterrand 24 hours after the President's Socialist Party suffered a crushing defeat in the final round of National Assembly elections on Sunday. Shortly after Mr Balladur took over the Hotel Matignon, the Prime Minister's official residence, from Pierre Beregovoy, the Elysee Palace released a list of 29 ministers, replacing a Socialist team of 41.
The foreign affairs portfolio went to Alain Juppe, the secretary-general of Mr Balladur's Gaullist RPR party; defence went to Francois Leotard of the centre-right Union for French Democracy (UDF). The interior went to Charles Pasqua, a 'historical' Gaullist who rallied to De Gaulle during the Second World War. Mr Pasqua held the post during the first 1986-88 'cohabitation'.
Mr Mitterrand's televised announcement that he was about to appoint Mr Balladur included a tribute to the new head of government, defusing a potentially tense atmosphere. Conservative politicians expressed satisfaction with an apparent desire not to exacerbate the obvious tensions between right and left.
Mr Mitterrand, 76, who has two years of his term to run, went straight to the point by confirming he was inviting Mr Balladur to be Prime Minister. The appointment had been a foregone conclusion for weeks. The last time he was confronted with cohabitation, in 1986, Mr Mitterrand said only that he was inviting the leader of the biggest party, then as now the RPR's Jacques Chirac, to form a government, but did not name him.
Mr Mitterrand's directness, and his kind words about Mr Balladur's 'competence', meant the first hours of the new power-sharing arrangement - even if Mr Mitterrand did say that he retained a right of surveillance over foreign and defence policy - were destined to pass off smoothly.
Apart from potential difficulties with the President in these areas, Mr Balladur faces tensions within the huge conservative majority in parliament. From the centre to the right wing of the Gaullists, there are considerable divergences over policy, particularly on Europe. Two-thirds of Gaullist voters, for example, voted against the Maastricht treaty in last September's referendum, although most of the RPR leadership campaigned in favour.
Mr Balladur will have to rely on Mr Chirac, who is staying out of government to prepare his own presidential campaign for 1995, to keep the Gaullists in line. As for relations with the UDF, a declared determination to share ministerial posts equally between Gaullists and their allies should keep the centre-right happy.
Potentially the most divisive member of the UDF is Valery Giscard d'Estaing, the former president, whose nearly 20-year feud with Mr Chirac dogs the French right. It is perhaps within his own UDF that opposition to Mr Giscard d'Estaing is strongest, and there were signs of moves to contain the former president, who has hinted strongly he would like to be the president, or speaker of the National Assembly.
Another possible candidate is Philippe Seguin, a Gaullist ex-deputy speaker best known for leading the anti-Maastricht campaign last year. If Mr Seguin were to get the post, this would recompense a Gaullist heavyweight and keep him above the fray in what could be turbulent months.
Prime Minister, Edouard Balladur (RPR); Ministers of State: Health, Simone Veil (UDF); Interior, Charles Pasqua (RPR); Justice, Pierre Mehaignerie (UDF); Defence, Francois Leotard (UDF). Ministers: Foreign, Alain Juppe (RPR); Education, Francois Bayrou (UDF); Economy, Edmond Alphandery (UDF); Transport, Bernard Bosson (UDF); Industry, Gerard Longuet (UDF); Economic Development, Alain Madelin (UDF); Labour, Michel Giraud (RPR); Culture, Jacques Toubon (RPR); Spokesman, Nicolas Sarkozy (RPR); Agriculture and Fisheries, Jean Puech (UDF); Higher Education, Francois Fillon (RPR); Environment, Michel Barnier (RPR); Civil Service, Andre Rossinot (UDF); Housing, Herve de Charette (UDF); Co-operation, Michel Roussin (RPR); Overseas, Dominique Perben (RPR); Youth, Michele Alliot-Marie (RPR); Communications, Alain Carignon (RPR); Veterans, Philippe Mestre (UDF).