Incumbent Medvedev proposes current prime minister as candidate for 2012 in address to congress of United Russia party.
Dmitry Medvedev, the Russian president, has proposed Vladimir Putin, the current prime minister, as presidential candidate for 2012, almost certainly guaranteeing Putin's return to office.
Medvedev made the proposal on Saturday in an address to a congress of United Russia, the pro-Kremlin party that dominates Russian politics, in Moscow.
"I think it would be right for the congress to support the candidacy of the party chairman, Vladimir Putin, to run for president."
There was no immediate official reaction from Putin or the party, but the proposal brought a heavy round of applause from the congress delegates.
"It is a great honour for me," Putin said to loud cheers and applause from thousands of party members gathered in a sports stadium.
"Thank you, I hope for your support."
The proposal appears to end months of intense speculation over whether Medvedev would seek a second term or step aside for his powerful predecessor. Medvedev is now set to be the only one-term president in post-Soviet Russian history.
Under constitutional changes pushed forward by Medvedev-which many long suspected were aimed at further strengthening Putin-the new president will have a six-year mandate rather than four years as before.
Al Jazeera's Neave Barker, reporting from Moscow, said: "I don't think anyone really knew that this would be the final configuration. People presumed that Putin would remain a senior figure in politics and perhaps in the government. But no one assumed that Putin would return to presidency potentially without a fight.
"What today's news shows is that Medvedev is behind Putin, and that both of them have a master plan that they want to put into action."
Opinion polls show Putin is sure to be elected for a six-year term in the March presidential election, ushering in what critics say could be an era of stagnation in the world's biggest country.
"This is a catastrophic scenario for Russia," said former cabinet minister Boris Nemtsov, now a member of the sidelined liberal opposition.
"We should expect capital flight, immigration and dependence on natural resources."
But Chris Weafer, chief strategist at Troika Dialog investment bank in Moscow, said Putin would work harder this time to attract foreign investment.
"I expect Putin will establish a very pro-business and pro-reform cabinet. I do not expect any market reaction to the news- investors are more concerned about global events and the weakening oil price."
United Russia also hopes to hold on to its two-thirds majority in the State Duma lower house in a parliamentary election on December 4 with Medvedev as the top candidate on its list.
Putin, 58, is widely seen as more conservative than Medvedev and some economists have said his return to the Kremlin could herald an era of economic stagnation in the world's biggest energy producer.
Others have said that although Medvedev, 46, is widely portrayed as more liberal, there is more difference in their style than in their policies.
Putin was president from 2000 to 2008 but steered Medvedev into the Kremlin in 2008 because he was barred from a third successive term by the constitution.
The next government is expected to face many economic challenges and calls for tough economic and political reforms, which critics say could provoke unrest.
It also faces difficult relations with the US, despite calls for a "reset" in relations, and foreign policy uncertainties following the upheaval in the Arab world.