UN Secretary General Ban Ki-moon has called on Burma's president and its opposition leader Aung San Suu Kyi to work as partners on a path to change.
Mr Ban, in a historic address to parliament, said the path was "too narrow to turn back" and praised both leaders for their courage and vision.
Mr Ban has met President Thein Sein and will later hold talks with Ms Aung San Suu Kyi.
She earlier announced a row over an oath of office for MPs was resolved.
Mr Ban last visited Burma in 2009, but was then denied access to Ms Aung San Suu Kyi.
'Vibrant political climate'
In his speech to parliament, Mr Ban praised the "vision, leadership and courage" of President Thein Sein and Ms Aung San Suu Kyi.
He said: "Burma can meet the challenge of reconciliation and development, but it will take full determination and common leadership and partnership."
Saying the country had reached a critical point, Mr Ban added: "The path to change is fragile and uncertain but it is too narrow to turn back."
He called on the parties in Burma to "summon the political will to make lasting change" and to look beyond political differences to address the larger interests of the nation.
Reform in Burma
- 7 Nov 2010: First polls in 20 years
- 13 Nov: Aung San Suu Kyi freed from house arrest
- 30 Mar 2011: Transfer of power to new government complete
- 19 Aug: Aung San Suu Kyi meets President Thein Sein
- 12 Oct: More than 200 political prisoners freed
- 13 Oct: New labour laws allowing unions passed
- 17 Nov: Burma granted Asean chair in 2014
- 23 Dec: NLD registers as political party
- 12 Jan 2012: Karen ceasefire signed
- 13 Jan: Highest-profile political prisoners freed
- 1 April: NLD wins 43 out of 45 seats in polls, generally seen as fair
- 23 April: EU suspends most sanctions for a year
"Elections and open government must be matched with a healthy and vibrant political climate," he said.
Mr Ban said much more work needed to be done to achieve peace with ethnic minorities, particularly the Kachin people.
He said expectations were very high among the people of Burma.
"They expect this parliament to not only advance reform but to accelerate the pace of change," Mr Ban said.
The BBC's Rachel Harvey, in the capital Nay Pyi Taw, says the parliamentarians sat quietly and respectfully as Mr Ban delivered key messages in a speech broadcast live on television.
She says this was a very significant moment - as Mr Ban became the first foreigner to address Burma's fledgling parliament.
His trip is the latest high-profile diplomatic visit to the once-isolated nation since a reformist government took office a year ago.
Mr Ban left frustrated after his last visit on the invitation of former junta strongman Gen Than Shwe, describing it as a "very difficult mission".
On Tuesday he will meet Ms Aung San Suu Kyi, who led her pro-democracy NLD party to win 43 seats in by-elections on 1 April. She was in detention during his last visit but was released 15 months later.
On Monday, she said a dispute over the wording of the legislative oath had been resolved and her party's MPs would attend the legislature for the first time on Wednesday.
The NLD had objected to the words "safeguard the constitution".
But Ms Aung San Suu Kyi said the NLD had agreed to the oath.
She said: "Some people might ask, given that we didn't accept the wording of 'safeguard' in the beginning, why we accept now. The reason we accept it, firstly is the desire of the people. Our voters voted for us because they want to see us in parliament."
One of the key points of Mr Ban's speech to parliament was the issue of ethnic tension.
The resurgence of fighting between the Burmese army and Kachin rebels has displaced tens of thousands of people, says our correspondent, Rachel Harvey, who is travelling with Mr Ban in Burma. But the UN has struggled to get the access it needs to be able to help them.
Mr Ban is also due to visit the northern Shan State, one of the world's biggest opium-growing regions, where the UN has started a poppy eradication programme.
On Sunday, he also paid his respects at the tomb of the late Burmese diplomat U Thant, who was UN secretary general from 1961 to 1971.
The current UN chief's visit to Burma is the latest in a series of high-level visits by foreign leaders.
European Union foreign policy chief Catherine Ashton announced in Burma on Saturday that the EU would open an embassy-level office in the country.
Earlier this week, it suspended non-military sanctions against Burma for a year in recognition of "historic changes".
In his speech on Monday, Mr Ban said: "I urge the international community to go even further in lifting, suspending, or easing trade restrictions and other sanctions."
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