US President Barack Obama on Wednesday celebrated Indonesia’s evolution from the rule of the “iron fist” to democracy and lauded his boyhood home’s spirit of tolerance as a model for Islam and the West.

Mr Obama said Indonesia’s transformation had been mirrored in his own life, in the 40 years since he left the world’s largest Muslim-majority nation, as a scruffy youth destined to become the president of the United States.

“Indonesia is a part of me,” Mr Obama said, recalling how his late mother had married an Indonesian man and brought her son to then sleepy Jakarta, where he would fly kites, run in rice paddies and catch dragonflies.

Mr Obama said he had been encouraged by Indonesia’s more recent rejection of Suharto-era authoritarianism and embrace of democracy, and said, with its new skyscrapers in now teeming Jakarta, it was now a key force in Asia.

The President gave his speech on a twice-postponed visit to Indonesia, due to be cut short by several hours as Mr Obama sought to outrace a cloud of volcanic ash spewed out by Mount Merapi, which has severely disrupted air travel.

More than 6,000 people, mainly students, packed an auditorium in the lush tropical grounds of the national university to hear the President’s keynote address.

“If you asked me — or any of my schoolmates who knew me back then — I don’t think any of us could have anticipated that I would one day come back to Jakarta as President of the United States,” he said to loud applause.

Obama’s speech on the second leg of a four-nation, eight-day tour designed to cement US strategic relations and to drum up export markets in emerging Asia, also reflected on his Cairo address to the Muslim world in 2009.

Then, buoyed by a bumper election win, Mr Obama vowed to forge a “new beginning” with Islam, following years of distrust fuelled by US wars in Iraq and Afghanistan.

“As I said then, and will repeat now ... No single speech can eradicate years of mistrust,” Mr Obama said, and vowed to do the hard work of forming common ground where suspicion and trust reigned. He held up Indonesia as an example of tolerance to a tense age of colliding cultures, when “one whispered rumour can obscure the truth, and set off violence between communities that once lived in peace.”

“Even as this land of my youth has changed in so many ways, those things that I learned to love about Indonesia — that spirit of tolerance that is written into your constitution, symbolised in your mosques and churches and temples and embodied in your people - still lives on,” he said.

“Unity in diversity. This is the foundation of Indonesia’s example to the world, and this is why Indonesia will play such an important role in the 21st century.”

Mr Obama also however vowed to prosecute the war against Al Qaeda cells along the Pakistan-Afghan border and in failing states such as Yemen and Somalia.

Obama delivered the speech after visiting Istiqlal mosque — Southeast Asia’s biggest.

Grand Imam Haji Mustapha Ali Yaqub led Obama and First Lady Michelle- looking elegant in silky flowing chartreuse suit and beige head covering adorned with gold beads — around the vast, domed mosque in central Jakarta.