The Russian system, known as Glonass, and the European Space Agency's Galileo system will compete with and complement the American Global Positioning System, originally designed to locate targets for guided missiles, but now also used in civilian applications.
The Glonass network of 24 geostationary satellites is not scheduled to be in operation before 2008, but according to the Ria-Novosti news agency, President Putin told the cabinet: "We have to see what we can do in 2006 and 2007 to develop the commercial utilisation of this system."
Russia has already launched 17 of the planned system satellites, including three placed into orbit on Sunday, but Putin said that some of these may be out of date by the time the navigation system is inaugurated unless the development is hurried along.
Russia also has a hand in the competing Galileo system. One of its rockets is scheduled to lift off from the Baikonur launch site in Kazakhstan on Wednesday carrying a British-built test satellite for the European network.
While the American and Russian systems are under military control, Galileo will be strictly for civilian satellite navigation after its inauguration scheduled for 2010.