The proposals to devolve power to Wales were outlined in a White Paper published by the Labour Government in July 1997.
It was the second time a Labour Government had put forward such plans. In a referendum held in 1979, proposals to establish a Welsh Assembly had been roundly rejected by the people of Wales. In the second referendum in September 1997, the plans to devolve power were approved by voters - although the result was very close.
The first elections to the National Assembly were held in May 1999 when 60 Assembly Members (AMs) were elected. Of the 60 AMs, 40 are chosen by the first-past-the-post system of voting and represent the same 40 geographical constituencies as Westminster MPs. The other 20 AMs represent five larger regions of Wales and are elected using a form of proportional representation known as the Additional Member System.
Unlike the Scottish Parliament, the National Assembly of Wales does not have full law-making powers. Primary legislation on Welsh affairs continues to be made in the UK Parliament at Westminster and Wales still has 40 MPs, along with a Secretary of State who sits at the Cabinet table. The UK Government also remains responsible for defence and national security, economic policy, employment legislation, foreign policy, home affairs, social security and broadcasting.
However, the National Assembly has control over a budget of more than £14 billion (2006-7 budget) and it can make secondary legislation on a defined range of policy areas.
Its areas of responsibility include agriculture; culture; economic development; education and training; the environment; health; sport; economic development; education and student loans; the environment; health; local government and housing; sport; social services; transport and the Welsh language.
Using the powers available to it, the Welsh Assembly Government has made some different policy decisions to Westminster. For example, Cardiff Bay was first to announce plans to abolish Key Stage 1 and 2 tests for school children. Wales was also the first UK nation to appoint a Children's Commissioner. Other examples include providing free prescriptions for people under 25 and pledging to abolish prescription charges by 2007.
In the Queen's Speech following the Westminster General Election in May 2005, the UK Labour government announced that it was planning to give more powers to the National Assembly. A White Paper outlining the reforms was published in June 2005.
It proposed giving the assembly more powers to shape laws for Wales in areas like health and education, while streamlining Westminster's role. But it stated that a referendum would be needed before the assembly was given full law-making powers.
The Welsh Assembly Government is led by a First Minister who appoints a Cabinet of Ministers responsible for key policy areas. To date, the Assembly has had two Labour First Ministers - Alun Michael (1999-2000) and Rhodri Morgan (2000-).
Full sessions of the National Assembly are held twice a week, on a Tuesday and Wednesday afternoon. Much of the work is done in smaller subject committees such as Education, Economic Development, Culture and Rural Affairs.
The Assembly has been meeting since its creation in a modern office building in Cardiff Bay. But a new chamber, designed by architect Lord Richard Rogers, opened on St David's Day 2006.