SANAA, Yemen - Yemen's vice president announced the formation of a national unity government Wednesday as part of a power transfer deal to ease embattled President Ali Abdullah Saleh out of power and end months of political turmoil, the state news agency said.

SABA said Vice President Abed Rabbo Mansour Hadi issued a decree approving the formation of the new 35-member Cabinet headed by the veteran independent politician Mohammed Basindwa. Government posts are equally divided between Saleh's Congress Party and the opposition.

Basindwa told The Associated Press that his government faces grave challenges, but said "we will work with all our potential to overcome any hurdle or difficulty."

Congress Party members will head the ministries of defense, foreign affairs and oil, while opposition politicians will lead the ministries of interior, finance and information. The Cabinet also included two women, one from each side.

The national unity government is part of the power transfer deal signed last month in the Saudi capital Riyadh by Saleh and the opposition allows Saleh to step down after 33 years in power in exchange for immunity from prosecution. If the U.S.-backed deal brokered by Yemen's powerful Gulf Arab neighbors holds, Saleh will be the fourth dictator pushed from power this year by the Arab Spring uprisings.

The deal is likely to leave more of the current regime intact than the uprisings in Tunisia, Egypt and Libya, and supporters and opponents continue to clash throughout the country.

Basindwa said the government will focus on providing public services to the people including electricity, water, fuel and basic commodities together with restoring security and stability. All of those staples have been lacking since the mass anti-Saleh protests broke out in February.

The new government is expected to present its program to the parliament for approval within 10 days.

Political analyst and writer Omar Abdel-Aziz said the greatest hurdle facing the government is "the existence of power centers in the regime and the relatives of Saleh who don't want him leave office." He said these power bases would create crises to blow up the situation, much like what happened Tuesday and Wednesday, when opposition forces and government troops exchanged fire in the central part of the capital Sanaa.

Neither side gave figures for casualties, but an eyewitness said that one civilian was killed and four wounded by government shells, and that security checkpoints were preventing ambulances from entering the street to evacuate the injured.

Hours before approving his Cabinet, Basindwa accused Saleh's outgoing ministers of systematically looting government properties.

In a statement, Basindwa said the Interior Ministry was looted and important documents were destroyed. He called for the formation of a committee to investigate the issue.

A security official said about 40 trucks were loaded Tuesday night with weapons, munitions and other materials from the Interior Ministry's warehouse. He spoke on condition of anonymity fearing government retribution.