Mr Prodi, whose backers include Tony Blair, promised thorough reform and an end to EU corruption, but left no doubt about his ambitious visions for European unity.
In a speech that will alarm Eurosceptics, Mr Prodi called for more majority voting in the EU, greater powers for the European Parliament and a "single economy" with "a single political unity".
Mr Prodi was nominated unanimously by Europe's leaders last month to succeed Mr Santer, but his appointment still needs to be ratified by the EU assembly in Strasbourg.
In a politically astute move Mr Prodi defused his main dispute with many MEPs by announcing he would not stand in June's elections to the European Parliament. Last week the former Italian prime minister had angered many parliamentarians by failing to rule out his candidature for his newly formed Italian centre left party, the Democrats. That would have put him in direct competition with Italian political opponents and their affiliated groupings in the Parliament.
Addressing MEPs in Strasbourg, Mr Prodi won support with a strong pledge that he "will not tolerate corruption", and that he and his Commission will drive through "a great age of reform and change. We are not here to conserve, but to reform," he added.
That was enough to win the tacit approval of the two biggest groups in the Parliament, the socialists and the centre-right Christian Democrats.
Both the European Parliament and the Council of Ministers should be included in a thorough review of the workings of the EU institutions, said Mr Prodi. There would be a review of the Commission's day-to-day working, and its distribution of portfolios to the 20 Commissioners.
But Mr Prodi also called for "transparent" relations, not only with Parliament, but with the Council of Ministers, the member state representatives whose meetings are held in private.
Although Mr Prodi's speech came the day after a meeting with Mr Blair in London, much of his language will alarm Downing Street. In particular Mr Prodi argued: "The single market was the theme of the 1980s. The single currency was the theme of the 1990s. We now face the difficult task of moving towards a single economy, a single political unity."
One British source said Whitehall would want to know more details of what was being proposed on the economic front, and in which areas greater majority voting is proposed to operate.
A complicated timetable now exists under which Mr Prodi is due to be ratified in May by the existing European Parliament. Between then and July he will discuss with member states the composition of the new Commission, which will have to be approved by the parliament elected in June. Those hearings will probably take place in late August or early September.