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Letterman walked on stage in the Ed Sullivan Theatre in New York yesterday through a chorus line of dancers holding signs that read "Writers Guild of America on Strike" and sporting a full beard he grew during his eight-week break.

"Ladies and gentlemen, two long months, but by God, I`m finally out of rehab," he said, joking that he had become introspective.

"Here`s what I learned about myself: show or no show, I really enjoy drinking in the morning."

Letterman`s arch rival, Jay Leno, and other late-night stars also resumed production of fresh broadcasts for the first time since film and TV writers launched their strike against major studios on November 5.

Letterman, who has lagged behind Leno in the ratings since 1995, has a chance to gain the upper hand as he returns with his writing team, and the blessing of the Writers Guild, under a special deal between the union and his production company.

"Ladies and gentlemen, the only show on the air now that has jokes written by union writers," Letterman declared. "I know you`re thinking to yourselves at home, `This crap is written?"`

Letterman`s deal with the Writers Guild also makes it easier to book guests who might baulk at crossing picket lines.

Leno`s show booked Republican presidential candidate Mike Huckabee as its first new guest.

Mr Huckabee did not think he would be crossing a picket line, because he believed the writers had made an agreement to allow late-night shows on the air. That is not the case, and picketers outside Leno`s California studio targeted Mr Huckabee.

The walkout had cost the town over half a billion dollars, said Leno. "Five hundred million dollars. Or as Paul McCartney calls that, `a divorce`."

Democratic candidate Hillary Clinton also jumped into the late-night game, appearing via satellite from Iowa to introduce Letterman`s show. "Dave has been off the air for eight long weeks because of the writers` strike," Senator Clinton said. "Tonight he`s back. Oh well, all good things must come to an end."

The Writers Guild has said the deal with Letterman includes provisions to pay writers for work distributed via the internet, a key issue in stalled talks aimed at ending Hollywood`s worst industrial dispute in 20 years.

The strike by 10,500 Writers Guild members has thrown the US television industry into disarray, postponed production on several major motion pictures and is threatening to spoil Hollywood`s annual awards season.

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