Putin said Chechen rebels would continue to threaten security

Mr Putin made the remarks during his annual state-of-the-nation address, in the same week that two suicide bombs killed more than 70 people in Chechnya.

"We will see this thing through to the end, without fail," Mr Putin said. "People in Chechnya will lead normal, human lives."

But he added that preparations for an amnesty for separatist rebels which he formally proposed in parliament on Thursday were going ahead.

I thank the Chechen people, for their courage, for not allowing themselves to be frightened Vladimir Putin

The amnesty will apply to rebels who have laid down their arms by 1 August this year, and to Russian soldiers accused of abuses in the republic.

Elsewhere in the speech, Mr Putin cited achievements in economics and foreign policy, and outlined a number of threats to Russia's statehood.

'Price worth paying'

The Russian president praised Chechens for their "courage" in voting in a referendum on the republic's constitution in March.

"Today I especially thank the Chechen people, for their courage, for not allowing themselves to be frightened, and not allowing themselves to be frightened today," he said.

At least 16 people died in Wednesday's suicide bombing

"The referendum showed at last that Chechens consider themselves an unalienable part of a united multi-ethnic Russian nation."

He added that rebels would continue to threaten the security of the republic, but that the risk of casualties was "a price worth paying" for Russia's unity.

Thousands of people have died since the current conflict began in October 1999, but the Russian authorities insist the situation in the republic is stabilising.

The new constitution is intended to pave the way for elections later this year, and a power-sharing agreement between the new Chechen authorities and Moscow.

'Serious threats'

Correspondents say Mr Putin is using the speech as an opportunity to deliver a political manifesto before launching his campaign for re-election next March.

He said Russia faced serious threats, not only from terrorism but also poverty, nuclear proliferation and a shrinking population.

"Nuclear weapons continue to spread on the planet," he said. "Terrorism threatens the peace and security of our citizens."

And he warned that, despite some improvements, Russia's economy was still unsteady and very weak.

He called for its Gross Domestic Product to be doubled over the next 10 years.

Other countries with highly developed economies were pushing Russia aside from promising world markets, he said, in what the BBC's Nikolai Gorshkov in Russia called a veiled criticism of the United States' policy for the rebuilding of Iraq.

On the subject of military reform, Mr Putin mentioned that Russia was developing a new generation of strategic weapons and vowed to reduce military service from two years to one by 2008.