Russian President Vladimir Putin has accused his government of not being ambitious enough in pushing for economic growth.

In a state-of-the-nation address to both houses of parliament he said the state needed to work harder to achieve economic growth.

He said the state bureaucracy was a major obstacle to progress, and called for wholesale restructuring.

Mr Putin said that life was improving - unemployment was down and incomes were rising - and people were beginning to believe they had a future.

But he added 40 million Russians were still living in poverty.

Estimates suggest Russian economic growth slowed to 5% in 2001, after hitting a record 9% in 2000.

Kremin adviser Andrei Illarionov has suggested a growth target of 8%, but Russia's Economic Development and Trade Minister, German Gref, has argued that aiming for rapid growth could destabilise the country.