BEIRUT — Lebanon faces a "catastrophe", Prime Minister Hassan Diab said on Wednesday after his newly unveiled cabinet held its first meeting to tackle the twin challenges of a tenacious protest movement and a nosediving economy.

Diab, the successor to Saad Hariri who quit as prime minister in late October, vowed to meet demands from the street but demonstrators were unconvinced.

Renewed clashes broke out near parliament in downtown Beirut between protesters hurling stones and fire crackers and police firing water cannons and tear gas.

The Lebanese Red Cross said least 22 people were injured, seven of them hospitalised.

Diab, a 61-year-old academic, was thrown in at the deep end for his first experience on the political big stage and admitted that the situation he inherited was desperate.

"Today we are in a financial, economic and social dead end," he said in remarks read by a government official after the new cabinet's inaugural meeting in Beirut. 

"We are facing a catastrophe."

Western sanctions on the Iranian-backed organisation are stacking up and economists have said the new government might struggle to secure sorely-needed aid.

Secretary of State Mike Pompeo appealed for the new government to enact serious reforms to tackle the twin challenges of a collapsing economy and angry street protests.

"Only a government that is capable of and committed to undertaking real and tangible reforms will restore investor confidence and unlock international assistance for Lebanon," he added.

French President Emmanuel Macron said he would "do everything, during this deep crisis that they are going through, to help". — AFP