Speaking before countries signed a new compact with President Hamid Karzai's government, Annan said continued international involvement was necessary to build on developments since the extremist ruling Taliban was ousted in 2001.

"This is a time for committed action," he explained. "After being forced to sacrifice so much in war, the Afghan people have willingly given even more to peace. They expect a peace dividend. And they deserve it."

Annan, flanked by British Prime Minister Tony Blair, Karzai and US Secretary of State Condoleeza Rice, praised Afghanistan's transition from "a nation held hostage by terror and by terrorists" into a "nascent democracy".

But he warned that the creation of a democratic constitution, representative national parliament and legitimately-elected government should not blind people to the "serious challenges ahead".

Chief among them were the fight against a resurgent Taliban, particularly in the south, extremist violence and the illegal narcotics industry, all of which threatened the gains made in the last five years, he added.

"Afghanistan's progress is also a global concern. It is in the interest of the entire international community to provide assistance as the country consolidates its moves towards peace, democracy and, above all, security, which underpins advancement on every other front," he said.

"The partnership (between the UN and Afghan factions) which emerged in Bonn (in 2001), and which we renew today, must continue to support the Afghan people... as they work to realise their vision of a vibrant Afghan state."

Annan said the new "compact" -- which will provide international military and economic support in exchange for Kabul promoting stability and development -- commits other countries to "sustained and prolonged engagement" in Afghanistan.

Security concerns were at the head of the list of priorities, he stated.

Forces from the North Atlantic Treaty Organisation (NATO) are deploying extra troops to Afghanistan as part of the reconstruction and security effort.