St George's Square in Valletta, for centuries the silent witness of Malta's history in the making, was the focus of its own milestone in history this evening when it was re-inaugurated at the end of a six-month rehabilitation project.

The square, which for the past few years was little more than a parking lot reserved mostly for MPs, has been paved and decorated to become Valletta's premier site for open air activity, especially as Freedom Square gives way to the building of the new Parliament building.

The rehabilitated square was inaugurated by Prime Minister Lawrence Gonzi, who said that this was a square which had a long history, but which also had a role in the present.

"This square is a mirror of the past with a modern inspiration," Dr Gonzi said.

He said the inauguration of the square marked an important part of the government's plans for Valletta which would also see the Palace becoming a showcase of all things Maltese, while Parliament would be moved to City Gate in what was the most ambitious of the Valletta rehabilitation process.

The process, he said, would also see the restoration of the bastions.

The rehabilitation of St George's Square, better known as Palace Square, was launched six months ago. The square, now a pedestrian area, features porfido and lava paving, modern lighting on 12-metre high poles and water installations, installed flush with the ground, which produce colourful water jets synchronized to music. Benches and other street furniture has been installed all around the square. They can be removed to permit the holding of parades.

Resources Minister George Pullicino explained that the design philosophy was the same as when the square was built centuries ago - to make the area a hive of social activity.

"We have joined modernity with respect for history," he said.

"We opted for a design that respects the architectural heritage of the surroundings while introducing elements such as water, light and music, which make of this square a space which is alive and fresh.

"In the same way as Laparelli, when he designed Valletta, wanted to create a square which lent itself to the importance of the majestic grand masters' palace, so too the rehabilitation project will continue to reveal the beauty of this jewel in the heart of our city."

The minister thanked the workers for their work.

Earlier, the ceremony featured a spectacular acrobatic display and a feature on the history of the square - including how it once featured a fountain to mark the arrival of the water supply in Valletta, the execution of the Maltese during the French occupation, the 1919 riots, the granting of the George Cross, the regular 'changing of the guard' ceremonies by the British forces, the celebration of Independence, the birth of the Republic, the arrival of Pope John Paul in 1990, and the various election celebrations.

The square, which had been in darkness, was then lit by the 'dancing' colourful water jets from the ground to music as the acrobats trapezed high overhead.

An acrobat in a storey-high transparent ball then rolled out onto the water jets. It was surrounded by children waving balloons as more lights were switched on in the ground to the sound of beating drums.

The ceremony ended with the unveiling of a commemorative plaque and a blessing by Archbishop Paul Cremona.