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Russian Prime Minister Vladimir Putin has ended months of speculation by saying he will run for president next March in an election that could open the way for him to stay in power for 12 more years.

Putin's announcement was greeted by a standing ovation on Saturday at a congress of his ruling United Russia party, but it alarmed critics who say his return to the presidency could herald an era of political and economic stagnation.

He and President Dmitry Medvedev have ruled in a power 'tandem' since Putin was forced by the constitution to yield the presidency in 2008 after serving a maximum two consecutive terms.

Putin, 58, accepted a proposal by Medvedev to return as president in the carefully choreographed congress in a Moscow sports stadium.

"I want to say directly: (Medvedev and I) reached an agreement between ourselves long ago, several years ago, on what to do in the future, on who should do what," Putin said.

"But both I and Dmitry Anatolyevich Medvedev believe that this is far from being the most important thing -- who will do what, who will sit in what place. What is far more important is something else: how we will all work, what results we achieve, and what the citizens of our country think of this."

Over 11 years in power, Putin has cultivated the image of a vigorous leader and been filmed riding bare-chested on horseback, scuba diving and showing off his judo skills. His policies -- crushing a Chechen separatist rebellion, taming super-rich businessmen and bringing wayward regions to heel -- have similarly won him popularity among Russians.

Putin, described in leaked US diplomatic cables as the "Alpha dog" in the tandem, proposed his younger and more liberal protege replace him as prime minister after the election to lead a young reformist government.

As president from 2000 to 2008, Putin oversaw an economic boom where household incomes improved on the back of a rise in global oil prices, and his tough talking and macho image helped restore Russia's self-confidence on the world stage.

Some economists say his return to the Kremlin makes it less likely that Russia will carry out much-needed changes such as pension reforms and reducing Russia's dependency on natural resources. Oil and gas revenues make up half the budget.

Others say Putin and Medvedev differ more in style than policy.

(Read by Christine Mallari. Christine Mallari is a journalist at the China Daily Website.)