SAINT PETERSBURG: Russian Prime Minister Vladimir Putin on Saturday strongly backed President Dmitry Medvedev's call for economic modernisation, moving to smother talk of differences between the two leaders.

Medvedev had in a state-of-the-nation address on November 12 made his strongest call yet for Russia to end its dependence on oil exports and modernize its economy, in a speech some analysts saw as a challenge to Putin.

"I am sure that this call reflects the mood of all of Russian society," Putin responded in a keynote speech to the annual congress of the ruling United Russia party in Saint Petersburg as Medvedev looked on.

"The crisis, with all its severity, has shown how costly it is for a country to reject innovation, have low work productivity, waste resources and have a slow bureaucracy," Putin said in his hour-long speech.

"The president posed the question about the necessary, thorough modernization of the Russian economy -- overcoming chronic backwardness and moving the country to a more modern level of development," Putin added.

United Russia, which holds a majority of 315 out of 450 seats in the lower house of parliament, has been criticised by some analysts for holding a dominant position akin to that of the Communist Party in the Soviet Union.

The party showed off its confidence with a glitzy conference marked by a deafening rendition of the Russian national anthem and the attendance of celebrities ranging from pop singers to Olympic gymnasts to cosmonauts.

Yet Medvedev -- who has made pledges for reform in Russia his calling card -- said it was also time for United Russia to modernize and appeared to scold it over alleged violations in local elections earlier this year.

"The party needs to modernise and make itself more flexible. It needs to start winning in an open fight," Medvedev said in a speech just before Putin's keynote address.

"Democracy exists, at the end of the day, not for the party... but for the citizen," said Medvedev.

In a rare rebuke for the ruling party, the president lambasted regional offices of factions, including United Russia, for letting "office intrigues" and "administrative procedures" get in the way of democracy in elections.

Parliament speaker Boris Gryzlov hailed the speeches, which he described as setting out "how the country will look in 10 years time".

He said the congress had also set the seal on the concept of "Russian conservatism" as the party's main ideology.

Putin is the leader of United Russia, although curiously he and Medvedev have declined to become card-carrying members of the party in an apparent bid to stand above the fray of day-to-day politics.

Putin congratulated United Russia, which dominates the Russian parliament, on working to prevent the economic crisis from turning into the financial meltdown that Russia had experienced in 1998.

"We have held this promise," Putin said to a burst of applause from thousands of delegates in his home city.

But he also warned that Russia's GDP would still contract 8.0-8.5 percent this year. "This is not as much as we expected... but it is still a lot and worse than in several other countries," Putin said.

Putin pledged the government in 2010 would press on with its policy of offering state guarantees for corporate loans, allowing companies to take out around 500 billion rubles (17.2 billion dollars) in credit.

Economists say Russia has suffered especially badly in the economic crisis due to its failure to implement reforms during Putin's 2000-2008 presidency when it was helped by high oil prices.

The speech represented a reversal of the November 12 state-of-the-nation address when Putin -- still seen by most as the Russian number one -- had sat quietly and attentively as Medvedev laid out his vision for Russia's future.

But this time it was Medvedev who listened to the speech, although he had earlier repeated his call for economic modernization in his shorter introductory address.