Can an independent-electron model be exact for an N-electron system?

Density functional theory (DFT) is commonly understood to provide an exact independent-electron model of N-electron ground states, using only local po tential functions. It has recently been shown that restriction to local pot entials leads to inconsistencies in the Thomas-Fermi theory, in the Hartree -Fock model of DFT (local exchange potential), and in linear response theor y (the exchange response kernel differs from the exact linear exchange oper ator derived in 1930 by Dirac). It is shown here that by extending the theo ry to a more general orbital functional theory (OFT) these inconsistencies or paradoxes can be resolved. An orbital-functional representation of corre lation energy leads to a formally exact theory of stationary states and of linear response. The theory is free of self-interaction and implies physica lly meaningful one-electron energies, consistent with Landau quasiparticles in many-body theory (C) 2001 John Wiley & Sons, Inc.