It was a historic day - a day which even the most optimistic observer of Northern Ireland's bitter and bloody past thought they would never witness.

As the world looked on, Ian Paisley and Martin McGuinness took the pledge of office as Northern Ireland's new First and Deputy First Ministers and heralded the start of a new democratic future.

The dawning of this new beginning saw old friends of the peace process return to Parliament Buildings. There, they saw two men from very different traditions, sworn enemies, proving that the events of the past do not have to be a barrier to a better, shared future.

That shared future started yesterday, when the DUP and Sinn Fein formally entered a power-sharing executive. They have agreed, along with Northern Ireland's other locally elected politicians, to take responsibility for the future, and this new political reality has finally given the people of Northern Ireland what they have both voted for and deserved.

I have no doubt that the new Assembly will work and the people will feel the benefits of a devolved government. Yes, there will be bumps and hiccups along the way, but that's a fact of life when in government.

I have now passed responsibility for bread-and-butter issues - such as education, health, the environment, investment and agriculture - to locally elected and accountable politicians, working on behalf of the people who put them into power. Direct Rule has finally come to an end and I cannot foresee the circumstances in which it would ever return. Northern Ireland has moved on and it will not be going back to the dark days of the past.

Yesterday's restoration of the Assembly not only brought the curtain down on direct rule, it also marked the completion of Northern Ireland's amazing journey away from conflict and towards peace.

Above: How we reported yesterday's historic event

The historic pictures at Parliament Buildings, of Ian Paisley as First Minister and Martin McGuinness as Deputy First Minister sitting side by side, provided the most visible expression to the principle on which the peace process has been based: the acceptance that the future of Northern Ireland can only be governed successfully by both communities working together.

The great media presence there to record history has gone, and behind the doors of parliament buildings the real work of government begins. The new Assembly and Executive will not want for challenges. When I became Secretary of State two years ago, I was astonished and dismayed to find that Northern Ireland was, and still is, heavily dependent on the public sector.

And so while there are record levels of employment, with rising house prices an indicator of increasing prosperity, there is a need to rebalance the economy to make it sustainable in the long term. That means more inward investment, more growth for indigenous companies and greater encouragement for entrepreneurs.

The deal negotiated with the Chancellor will not only see more new money going in but, crucially, the Executive can plan ahead in the certainty that its budget is fixed and, if it moves at all, it will increase. Nowhere else in the UK has been given that commitment.

But there will have to be a lot of smart work to equip Northern Ireland to face the global challenges from eastern Europe, India and China. I have often said Northern Ireland can be world class, and I still believe that, but it won't happen of its own accord and it won't happen overnight. The new Assembly and Executive have to make it happen.

Equally, there are fundamental issues around education that need to be addressed urgently. At the top end, Northern Ireland schools have an enviable record of high academic achievement. But there are also far too many young people who leave school with no qualifications. My own firm conviction is that having a system of academic selection that brands the majority of children aged 10 or 11 as failures is morally, politically and educationally indefensible. The new Executive and Assembly will have to decide on the future shape of education, so that all children can have the opportunity to develop their potential.

And so it will be across the range of issues on the environment, health and agriculture, that up until yesterday I and my ministerial team had to deal with.

I have been a passionate advocate of local democracy through devolution. It has been a privilege to have been able to play a part in bringing it to Northern Ireland.

Never has a minister so eagerly anticipated losing power, and never was it handed over with a more glad heart.

The author is Secretary of State for Northern Ireland and Wales