Rousseff attacked her enemies for trying to remove her in a "coup" as she sealed her risky bet to team up again with her old mentor, whose new position grants him ministerial immunity, protecting him from prosecution in criminal court.
She got as far as giving Lula a post-ceremony hug before federal judge Itagiba Catta Preta suspended the embattled ex-president's nomination to the cabinet chief post "or any other that grants him immunity."
It plunges Rousseff's tottering government into even deeper uncertainty as the president fights off new impeachment proceedings, mass protests, a deep recession and the splintering of her coalition.
Lula and Rousseff, the leftist leaders who have governed Brazil for the past 13 years, were all sharp suits and warm smiles at the swearing-in ceremony at the presidential palace, belying the catastrophic political and economic crises gripping the once-booming Latin American giant.
Also Read
But the ceremony reignited the protests sparked yesterday by an anti-corruption judge's leak of a damning wire-tapped phone call between Rousseff and Lula suggesting she appointed him to save him from arrest.
"The putschists' shouting won't make me veer from my path or bring us to our knees," said Rousseff.
Lula, the once wildly popular president who led Brazil from 2003 to 2011, is charged with accepting a luxury apartment and a country home as bribes from executives implicated in a multi-billion-dollar corruption scam at state oil company Petrobras.
Rousseff vehemently denies she appointed him to help him dodge prosecution, insisting she needs his political acumen to help rescue her government from crisis.
Rousseff called Lula's bugged phone to tell him she would be sending him the official decree nominating him as her chief of staff so he could make use of it "if necessary."
That extract seems to confirm that Lula's nomination was aimed at saving him from possible arrest.