In his address to the nation on Wednesday, the Russian president said Moscow stood "unambiguously" for preventing the spread of nuclear weapons in the world.

But, in an apparent reference to mounting tension between the US and Iran, though without mentioning either directly, Putin said: "Methods of force rarely give the desired result and often their consequences are even more terrible than the original threat."

Russia agrees with the West that Iran should not have nuclear weapons.

However, it disagrees on two main points: whether Iran is actively seeking a bomb, and whether sanctions would be effective in persuading Tehran to curb its nuclear work.

Russia holds a veto in the United Nations Security Council, which would vote on any international action against Iran.

A draft resolution urging Iran to stop enriching uranium was submitted last week. Moscow said it needed changes.

Democracy

Media had expected Putin to focus on foreign policy in his hour-long Kremlin speech to the people that followed criticism from the White House over his record on democracy.

Cheney has accused Moscow of
going backwards on democracy

In the end he took only a mild swipe at Washington, obliquely accusing it of hanging on to outdated prejudices.

"Not everyone in the world has been able to move on from the stereotypes of bloc-thinking and prejudices which are a carry-over from the epoch of global confrontation, though there have been fundamental changes in the world," he said.

US-Russian relations reached their coldest moment last week when Dick Cheney, the US vice-president, accused Moscow of retreating on democracy and using its vast energy resources as a tool for "intimidation and blackmail" against its neighbours.

President Bush, who will meet Putin in St Petersburg in July at a G8 summit of leaders of the industrialised world, has now stepped in saying in a German newspaper that Russia is giving out "mixed signals" on democracy.

Population decline

Putin, unchallenged at home and due to step down in 2008 after two terms in office, focussed on Russia's catastrophic demographic situation, saying the population of the country was falling by 700,000 people every year.

"The problem of low birth rates cannot be resolved without a change in the attitude of our society towards the issue of family and family values"

Vladimir Putin

He said a programme would be set up in next year's state budget that would make 1,500 roubles ($55.39) monthly payouts to families for their first baby and double that for a second.

"The problem of low birth rates cannot be resolved without a change in the attitude of our society towards the issue of family and family values," he said.

Armed forces

Putin also said Russia needed armed forces that were capable of responding to modern threats.

"We must not repeat the mistakes of the Soviet Union, and of the Cold War," he said. "We must not sacrifice the interests of socio-economic development to develop our military complex. That is a dead end.

"Our military and foreign policy doctrines should answer the most topical question: How can we fight not just against terror but against nuclear, biological and chemical weapons of mass destruction?"