MOSCOW: Vladimir Putin will retain a "key role" in Russia for years as prime minister, new President Dmitry Medvedev said Thursday, as the two men opened an unprecedented era of dual rule.

Putin was confirmed as prime minister by 392 of the 448 deputies at an extraordinary session of the lower house of parliament, the State Duma, one day after Medvedev was inaugurated at a lavish Kremlin ceremony.

"I think no one has any doubt that our tandem, our cooperation, will only continue to strengthen," said Medvedev.

As head of government, Putin will play a "key role" in shaping Russia's development through to 2020, Medvedev said ahead of the vote.

Putin, 55, made a detailed speech, while Medvedev listened, outlining plans to make Russia an economic and financial powerhouse, as well as measures for improving social conditions.

Putin's move to the premiership after eight years as president completed a carefully choreographed scheme in which his trusted 42-year-old protege became president, while Putin moved into government.

The Medvedev-Putin dual leadership is unprecedented in Russia, where overwhelming authority has traditionally rested with the Kremlin.

Following a grandiose inauguration ceremony in the Kremlin's golden Andreyevsky Hall on Wednesday, Medvedev's first act as president was to nominate his former boss for the prime minister's post. There was no indication of who will be in the new government.

Putin remains popular among Russians who credit him with the country's economic revival on the back of massive energy exports and a newly assertive role on the world stage.

But while he vows to cooperate closely with Medvedev, both leaders have claimed major power for their respective new offices, leading some analysts to predict a potentially unstable partnership.

Many observers see the most likely outcome as a broad continuation of Putin's policies, but some believe Medvedev, a former corporate lawyer, could soften Putin's more hardline positions.

In his speech, Putin focused on domestic policy, the traditional sphere of the prime minister, calling for lower taxes on oil companies, a battle against inflation and a boost to spending on healthcare and education.

"For us the vitally important task is to significantly increase the effectiveness and the stability of the national economy," he said, calling for improvements in productivity, infrastructure and the investment climate.

Putin said Russia had turned into "a different country" since he was last prime minister for a few months in 1999, shortly before being elected president for two terms.

He said Russia was now the seventh largest economy in the world and would overtake Britain to become the sixth largest by the end of the year.

Medvedev is the youngest Kremlin leader for more than a century and, unlike Putin or most other members of Russia's ruling elite, he has no known past in the KGB or other security services.

Medvedev soon got his first taste of his vast new powers when a military officer presented him Wednesday with a briefcase that controls Russia's nuclear arsenal.

That power will be on display on Friday when Russia's Topol-M intercontinental ballistic missiles will be rolled through Red Square in a Victory Day parade that will feature heavy weaponry for the first time since the Soviet era.

Medvedev and Putin were to review the parade, which is being seen as much as an assertion of Russia's new military might as a commemoration of the end of the World War II.

Under the constitution, Medvedev has the right to fire his prime minister and dismiss the government at any time. Following reforms by Putin, parliament has been hugely weakened and provides little oversight.

However, now that Putin is starting a new career as prime minister and leader of the ruling United Russia party, that may change.

With two thirds of votes in the legislature, United Russia can in theory change the constitution.

- AFP/ir