Russian President Dmitry Medvedev on Monday appointed three of Vladimir Putin's closest aides to run his administration, ensuring Putin retains his strong grip on power despite leaving the Kremlin.

Putin, who moves to become prime minister, also announced a cabinet which combined key ministers and powerful figures into what analysts said was an unusually strong team.

Medvedev and Putin have pledged to rule Russia together in an unprecedented "tandem" arrangement. But many analysts said the appointments confirmed that Putin remains the real boss, at least for now.

Key Putin ally Sergei Naryshkin - a former government chief of staff reported by Russian media to have links to the security services - was named head of Medvedev's Kremlin administration, while one of Putin's main ideologues Vladislav Surkov becomes the first deputy chief of staff.

"I don't think the appointment of Sergei Naryshkin as head of the presidential administration is the decision of Dmitry Medvedev," said independent political analyst Georgy Bovt.

"I think it is the decision of Vladimir Putin and I don't actually see any appointments apart from (new Justice Minister Alexander) Konovalov that you can put down exclusively to Dmitry Medvedev."

Surkov is credited with partly formulating Russia's "sovereign democracy" system of government which some observers say is autocratic and Medvedev has criticised in the past.

Alexei Gromov, Putin's former press secretary, will also stay in the Kremlin as deputy chief of the presidential staff.

Putin re-appointed his long-serving finance minister, Alexei Kudrin, seen by markets as a guarantor of Russia's free-market policies. Sergei Lavrov, the public face of Moscow's assertive, anti-Western diplomacy, also stayed on as foreign minister.

"While planning the optimisation of federal executive authorities, we aimed to increase the efficiency of the state machinery and its personnel," Putin told reporters as he announced his nominations.

Russia's stock market, which surged last week on the successful conclusion of the political transition, posted further gains of 1.5 percent on Monday.

TWO KEY FIGURES

Two key figures from the all-powerful Kremlin administration moved with Putin to take up new roles in the White House, the riverside seat of Russia's government.

Sergei Sobyanin, a former governor of the oil-rich region of Tyumen who headed the Kremlin administration under Putin, becomes the new premier's chief of staff and one of five deputy prime ministers.

Igor Sechin, formerly a deputy head of the presidential administration and a key Kremlin hardliner with close ties to the security services, becomes another of the five deputy prime ministers, tasked with overseeing industry and energy.

Analysts said the combination of key Kremlin figures and influential serving ministers made Putin's administration unusually strong. Under Russia's 1993 constitution, presidents have dominated with prime ministers usually being weak figures.

State-controlled oil major Rosneft strongly outperformed the stock market, with gains of 4.5 percent, in a performance which underlined the close ties between the Kremlin and business.

Traders attributed the rise to the promotions of Sechin and Naryshkin, who were also Rosneft chairman and deputy chairman respectively.

Former prime minister and ex-collective farm boss Viktor Zubkov continued in the cabinet as one of two first deputy prime ministers - the most senior posts after Putin's. The other was Igor Shuvalov, who was Putin's top economic aide at the Kremlin.

"Overall, there are no surprises," said Yevgeny Gavrilenkov, chief economist at Moscow brokerage Troika Dialog.

"It is no doubt a positive sign that Kudrin, known for his conservative policies, has stayed ... It is logical that people who worked with Putin in the presidential administration moved to the government."

Among the few major changes were the removal of Telecoms Minister Leonid Reiman, who has repeatedly denied media reports that he indirectly owns a major stake in Russia's number three mobile operator Megafon.

Medvedev's other two key appointments were the naming of former FSB spy service chief Nikolai Patrushev, a Putin ally, to run Russia's powerful Security Council and the promotion of FSB deputy chief Alexander Bortnikov to replace Patrushev.

Bortnikov was previously head of the FSB in Putin's home city of St Petersburg.

Under Russia's constitution, the prime minister proposes cabinet names to the president, who must approve them before they are final.