Holding talks with Iyad Allawi in Moscow on Tuesday, Putin said he could not "imagine how elections could be organised under a full occupation of the country by foreign troops".
"I also cannot imagine how you on your own will be able to restore the situation in the country and stop it from breaking up," he said.
Allawi re-affirmed the election date of 30 January, but raised the prospect of troubled regions taking two or three weeks longer to vote.
But his proposal could not immediately be checked with election officials and would break a UN deadline of 31 January for the ballot.
An election that provides an internationally accepted Iraqi government is a prerequisite for US President George Bush to declare the invasion a success and bring troops home.
But international voting experts plan to meet in Canada this month to find a way of monitoring the election in the likely absence of outside observers, a top Canadian official said.
Plans for monitoring troubled elections come as the Pentagon issued figures for a record monthly US toll in Iraq. It said 136 American soldiers were killed in November, one more than the previous highest of 135 in April.
Since Iraq was invaded and occupied in April 2003, 1276 US troops have died. But in order to protect the election, Bush is increasing US troop numbers by about 10% to 150,000.
With increasing instability in the country despite the election deadline edging closer, Iraq's interim Deputy Prime Minister Barham Salih said Iraq's Sunni Muslim neighbours were "playing a direct role in killing Iraqi people".
Meanwhile, Interim President Ghazi al-Yawar focused particular criticism on Syria's role in Iraq.
"There are people in Syria who are bad guys, who are fugitives of the law and who are Saddam remnants who are trying to bring the vicious dictatorship of Saddam back," al-Yawar said.
Ghazi al-Yawar (in white) blames
Syria for Iraq's recent instability
Also stung by Salih's criticism, Jordan's King Abd Allah II told the Washington Post that Iran would be largely to blame if elections turn out to be a sham.
Abd Allah said more than 1 million Iranians have crossed the border into Iraq, many to vote, and he said they were being encouraged by the Iranian government.
The king also reportedly accused the Iranians of paying salaries and providing welfare to unemployed Iraqis to promote pro-Iranian public sentiment.
The king said in an interview with the newspaper that "it is in Iran's vested interest to have an Islamic republic of Iraq ... and therefore the involvement you're getting by the Iranians is to achieve a government that is very pro-Iran".
Iraqi officials have previously suggested that Iran, which is overwhelmingly Shia Muslim, is backing Iraqi Shia - who form a substantial proportion of the population.
But Iran has said it has no interest in fomenting instability in Iraq and it tries to block any infiltration into Iraq by fighters - while pleading that its porous borders are hard to police.