"The new team will continue efforts to rescue citizens, to handle social and infrastructure issues around the disaster areas," spokesman Andi Mallarangeng told reporters.

The Sidoarjo Mud Management Agency, chaired by a former army general, replaces a temporary team with a seven-month tenure that ended last week.

Mallarangeng said a decree to set up the team issued by President Susilo Bambang Yudhoyono stipulated the government was responsible for covering costs related to the disaster's social impact on people living outside swamped areas.

However, PT Lapindo Brantas, the operator of the well from where the mud has been flowing, would pay for stopping and handling the mudflow as well as compensation for directly affected residents, he said.

Lapindo had been told by the government to pay 3.8 trillion rupiah (US$418 million) to victims and for efforts to halt the flow, but officials say the cost could double that.

Lapindo and and PT Energi Mega Persada Tbk, which indirectly controls Lapindo, dispute the idea that the disaster was caused by the drilling and also whether Lapindo alone should shoulder the cost.

Energi is owned by the Bakrie Group, controlled by the family of Indonesia's chief social welfare minister, Aburizal Bakrie.