A density functional theory (DFT) of lattice fermion models is presented,
which uses the single-particle density matrix gamma_{ij} as basic variable. A
simple, explicit approximation to the interaction-energy functional W[gamma] of
the Hubbard model is derived from exact dimer results, scaling properties of
W[gamma] and known limits. Systematic tests on the one-dimensional chain show a
remarkable agreement with theBethe-Ansatz exact solution for all interaction
regimes and band fillings. New results are obtained for the ground-state
energyand charge-excitation gap in two dimensions. A successful description of
strong electron correlations within DFT is achieved.Comment: 15 pages, 6 figures Submitted to PR