Officers of the external affairs ministry held a farewell function for Menon Friday at South Block that was also attended by External Affairs Minister S.M. Krishna.

Menon is likely to join the Prime Minister's Office as prime minister's special envoy for the neighbourhood, reliable sources said.

Rao takes over as India's chief diplomat at a time when the neighbourhood is seething with problems and the government's Pakistan policy, after the Sharm el-Sheikh joint statement that delinks terror from composite dialogue and includes a reference to Balochistan, is being questioned by the opposition.