Under thunderous applause, Putin, 58, "accepted" the proposal by Medvedev to return as president. He could now serve up to two more six-year terms, meaning he could be in power as president until 2024.
For his part, Medvedev, 46, agreed to lead United Russia's list of candidates in a move intended to help the party retain a two-thirds majority in the lower house and prepare him to become premier.
According to analysts, Medvedev has failed to emerge from Putin's shadow since they started sharing power. By contrast, Putin has in more than a decade in power cultivated the image of a vigorous leader and his policies - crushing a Chechen separatist rebellion, taming super-rich businessmen and bringing wayward regions to heel - have buttressed his popularity among Russians.
Putin looks sure to be elected president in March but some Russians regard the proposed job swap by Putin and Medvedev with mistrust, Reuters reported. Some are tired of the two, or a small circle around them, taking key decisions in secret.
Critics say that Putin, who was once a KGB officer in East Germany, is riding roughshod over human rights and democracy, and expanding the power of the security forces.
Many Russians oppose what they see as an abuse of power by the ruling party United Russia. However, a protest demanding the resignation of both Putin and Medvedev, held in Moscow on Sunday, gathered only some 100 people, the local press reported.
Finance minister rebels
Russia's finance minister Alexei Kudrin, a Putin ally with prime ministerial ambitions, said on Sunday he had disagreements with Medvedev and would not work under his authority in the next government.
Setting out his differences with Medvedev over the president's support for an increase in military spending, he said: "I think that the disagreements I have will not allow me to join this government."
Kudrin won the respect of investors as a guardian of financial stability by saving windfall oil revenues for a rainy-day fund which helped Russia through the 2008 global economic crisis.
The Putin-Medvedev tandem is a single force and those who disagree with this approach will leave the team, Dmitry Peskov, a spokesman of Putin said on Sunday
