WASHINGTON (AFP) — Hillary Clinton may have fallen short in her quest to become America's first woman president, but she will have a unique opportunity to carve her name on global history books as secretary of state.

The feisty former first lady will face monumental challenges overseas, including the ongoing wars in Iraq and Afghanistan, as well as the threat of terrorism, brought once again to the fore by the recent Mumbai attacks.

But perhaps the biggest task facing the 61-year-old, high-profile senator from New York will be restoring the country's tarnished reputation and ushering in a new era of US diplomacy promised by president-elect Barack Obama.

Clinton will also have to address foreign policy disagreements with her future boss she expressed when competing with Obama during the Democratic primary. On the campaign trail, she ridiculed Obama's pledge to meet "without preconditions" with leaders of rogue states as "irresponsible, and frankly, naive."

Obama owes his early rise to national prominence in large part to his opposition to the Iraq War, while Clinton voted for the 2003 invasion. Much of the primary fight also centered on the issue of experience, with Clinton claiming Obama was not ready to take the "3 am phone call."

She can already count on massive support overseas thanks to the image she built as first lady and the goodwill still felt around the world for her husband, former president Bill Clinton.

But following her defeat, Clinton worked hard for Obama, urging her millions of loyal supporters to back his bid and elect the country's first African-American president.

EU foreign policy chief Javier Solana has said her nomination as America's top diplomat "would be very well taken" abroad.

"She is a strong personality. She is an appropriate person, capable, with experience, well known. I think it would be very well taken by the majority of people," Solana said during a recent visit to Washington.

Current Secretary of State Condoleezza Rice has also indicated she believed the department would be in good hands.

Refusing to be drawn into speculation of Clinton's nomination, Rice said in apparent reference to the bid: "I've heard some names of some great people, and I think that the department and the country will be in good hands."

Clinton has not yet confirmed the reports in person, but a person close told AFP: "I can confirm that she will be in Chicago tomorrow to be named Secretary of State.

Obama's formal roll-out of Clinton at a Monday press conference in Chicago nearly a month after his historic election triumph will cement a remarkable alliance following the pair's acrimonious and prolonged Democratic primary duel this year.

The likely pair has initiated many allusions to the "team of rivals" cabinet of President Abraham Lincoln, Obama's political hero.

Clinton stands "head and shoulders above every candidate" for the job, said David Rothkopf, author of a pioneering booking studying the US National Security Council.

"She has international stature ... she would be able to deal directly with the president and express herself effectively to him and to be his best strongest advocate on the international stage."

Clinton is said to have been initially reluctant to accept the post. But reports indicate that she won a guarantee of direct access to the president.

Fears that her nomination could falter because of her husband's charitable foundation and lucrative speechmaking appear to have been resolved under a deal between the former president and the Obama team.

As secretary of state, she will face high expectations from a world weary of the eight years of President George W. Bush's policies, especially as concerns the conduct of the "war on terror," and which has enthusiastically embraced Obama's promise of change.

It will also cap a remarkable political career, catapulting her out of a relatively junior position in the Senate to become the face of US diplomacy.

The challenges ahead are staggering, as Clinton herself has acknowledged.

"The next president will be the first to inherit two wars, a long-term campaign against global terrorist networks, and growing tension with Iran as it seeks to acquire nuclear weapons," Clinton wrote during her White House bid.

"The United States will face a resurgent Russia whose future orientation is uncertain and a rapidly growing China that must be integrated into the international system," she wrote in the Foreign Affairs magazine last year.

She has also stressed the need for Arab-Israeli peace, and warned of the need to address "the looming long-term threats of climate change and a new wave of global health epidemics.

"To meet these challenges, we will have to replenish American power by getting out of Iraq, rebuilding our military, and developing a much broader arsenal of tools in the fight against terrorism," she argued.