SOUTH African President Nelson Mandela was praised by the Queen last night for setting his country on the course of freedom during the start of an emotional state visit to Britain.

After many thousands thronged the streets of London to greet Mr Mandela, she praised his leadership in uniting black and white in a fledgling democracy.

``You have, yourself, provided the leadership and, by your willingness to embrace your former captors, have set the course towards national reconciliation and freedom for all the people of South Africa,'' she said.

But the Queen acknowledged that it would take longer to build a ``more truly equal society no longer characterised by the gulf between the living standards and expectations of different races''.

However, she was confident that South Africa had a ``bright and exciting future''.

At a Buckingham Palace state banquet in his honour, she told Mr Mandela: ``Mr President, South Africa has a special place in my heart and in the hearts of the British people.''

There was a new warmth in the friendship between South Africa and Britain - in politics, trade, culture, science, education, tourism, and sport.

The Queen paid tribute to Mr Mandela's ``wisdom, understanding, and experience''.

She said: ``You and your country can show the world, often dominated by division, that reconciliation and decency can prevail.''

The President said his visit, together with the Queen's state visit to South Africa in March last year, had ``set the seal'' on the new relationship between the two countries.

``As we approach the 21st century, our relationship is one of friendship, fortified on South Africa's side by a warmth and respect for yourself, for Britain, and for the Commonwealth,'' he said.

``We value in particular our burgeoning cultural, historical, and economic relations with Her Majesty's Government and the people of Britain.''

He underlined that one of the principal purposes of the state visit was to strengthen further trade links and British investment in South Africa.

Mr Mandela's official welcome to Britain by the Queen and Duke of Edinburgh on London's Horse Guards yesterday became the people's celebration as many thousands of well-wishers cheered his arrival.

It was the biggest turnout for a royal welcome since the advent of the age of television.

More than 6000 people packed the public stands on Horse Guards to see Mr Mandela arrive.

Schoolchildren waved South Africa's multi-coloured ``rainbow'' flags, cheered and chanted: ``Nelson, Nelson, Nelson.''

An always-smiling Mr Mandela, 78, waved back to the enthusiastic crowds.

The Queen clearly likes him and showed obvious delight as she introduced him to the assembled dignitaries.

Mr Mandela appeared relaxed as he met the Duke of Edinburgh, the Prime Minister, and senior Cabinet Ministers at the official start to the visit.

The journey down The Mall to Buckingham Palace was by open-topped horse-drawn carriage.

As the carriage swept towards the palace gates, the cheering crowd broke into spontaneous applause.

Mr Mandela's visit is also the people's visit and, before the official start of the trip, he had already been on the streets of London to meet the public.

An early riser - a habit from 27 years of imprisonment under South Africa's former apartheid regime - Mr Mandela got up at dawn and, at 5.15am, went for a stroll in Hyde Park.

During the walk, Mr Mandela, wearing a South African Olympic Squad tracksuit and shadowed by armed bodyguards, stopped to shake hands with early-morning strollers and commuters.

After lunch at Buckingham Palace, there was the traditional exchange of gifts.

The Queen gave Mr Mandela an eight-volume set of Dr Johnson's edition of Shakespeare, published in 1768, and presented in a specially-made leather box.

Princess Zenani, his daughter, was given a Royal Crown Derby tea set for six in Milldale pattern.

The Prince of Wales gave the president a lithograph of one of his watercolours of Sandringham, the Queen's Norfolk estate.

Mr Mandela presented the Queen with a set of four gold commemorative coins. He gave the duke a chess set of African figures, and the Prince of Wales received a smaller version of the set.

The President called on the 95-year-old Queen Mother at her Clarence House residence for tea, followed by an address of welcome from the Lord Mayor and councillors of the City of Westminster at St James's Palace.

He then visited Westminster Abbey to lay a wreath at the Tomb of the Unknown Warrior.

But he will break away from the round of formal events that usually mark state visits with walkabouts on Friday in Trafalgar Square and in Brixton.

``It must not be forgotten that the masses of the people in this country and elsewhere, were in the forefront of the anti-apartheid struggle,'' he said.

``It is absolutely necessary, now that we have succeeded, to go and thank them for that contribution. And I am looking forward to going to Brixton,'' Mr Mandela told BBC radio.