U.S. President Barack Obama will name former Northern Ireland peacemaker George Mitchell as his Middle East envoy to deal immediately with the Israeli-Palestinian conflict, sources familiar with the matter told news agencies on Tuesday. (UPDATED)

The choice, if confirmed, appears set to appease Arab and other critics who contend Washington is biased in favor of Israel.

Best known for peacemaking efforts in Northern Ireland, the former Senate majority leader, 75, also has experience in the Middle East. Mitchell was appointed by former President Bill Clinton to find ways to halt Israeli-Palestinian violence.

If he gets the job, Mitchell's first challenge would be dealing with the crisis in Gaza, where Israeli troops are withdrawing after a 22-day offensive. A fragile truce between Israel and the Hamas Islamist movement took hold at the weekend.

Mitchell's 2001 report on the Israelis and Palestinians called for the Israelis to freeze construction of new settlements and stop shooting at unarmed demonstrators, and Palestinians to prevent attacks and punish those who perpetrated them.

In the run-up to his inauguration, Obama had resisted pressure to speak out on the three-week Israeli offensive in the Gaza Strip launched on Dec. 27, insisting there was "only one president at a time" to represent the United States abroad.

But he promised to reach out to Muslims worldwide, telling those of Islamic faith that he would "seek a new way forward, based on mutual interest and mutual respect."

Mitchell will be appointed on Wednesday following the Senate's expected confirmation of Hillary Clinton as Obama’s secretary of state, The Washington Post newspaper said quoting Obama aides.

James Zogby, president of the Arab American Institute, said appointing Mitchell would show Obama's determination to reclaim U.S. leadership on Middle East peace issues.

"This is a president who appears to be serious on the Middle East from day one. This is an appointment that sends the message, 'I'm ready to solve this,'" Zogby told Reuters.

Mitchell brokered talks between Roman Catholics and Protestants in Northern Ireland in an effort that led to the 1998 Good Friday Accord aimed at stemming the long-standing conflict there.

He is the son of a Lebanese immigrant mother, and of an Irish father who when orphaned was adopted by a Lebanese family.

Obama Wednesday started the job of hauling his crisis-weary nation out of its "winter of hardship" by settling into the Oval Office, a day after his historic inauguration as the first black U.S. president.

After a late night waltzing with wife Michelle at glitzy inaugural balls, the president was set to take aim at his top military and economic challenges, in the hope of getting his administration off to a fast start.

His first move came in the form of an order to prosecutors at the controversial military tribunals in Guantanamo Bay, Cuba, to seek a suspension of the trial proceedings.

Military judges were expected to rule later Wednesday on the request, which would affect the military trials of five alleged plotters of the Sept. 11, 2001 attacks as well as a Canadian held on accusations of killing a U.S. soldier in Afghanistan.

Key White House staff members were also set to pour into the presidential mansion, with the weight of financial and foreign policy threats suddenly resting on their shoulders.

Obama was due to spend the first part of his day seeking divine blessing for his presidency at a traditional prayer service at Washington’s National Cathedral.

Then he was expected to call in his top economic lieutenants to start the task of repairing the ruptured US economy and shepherd a huge 825-billion-dollar stimulus package through the U.S. Congress.

In a sign of the tough task ahead, the Dow Jones Industrials Average plummeted four percent on Obama’s first day in office Tuesday as investors were spooked by deep problems in the banking industry.

Obama was also expected to meet his top military leaders to fulfill a campaign promise -- telling the generals to formulate a plan to get U.S. troops out of Iraq, and reorienting military efforts towards the war in Afghanistan.