Moscow  - Vladimir Putin pulled tight the shuddering lines of Russia's fledgling post-Soviet federalism when he took office in 1999 creating the so-called "power vertical," a part feudal, part bureaucratic human pyramid of power ending at the Kremlin.

But for the first time in Russia's history Wednesday, the head of state is not being forced from office but leaving at the peak of his power and popularity, in compliance with the constitution.

In another first, Putin is swapping the presidency for the premiership, resolutely signaling his intention to retain sway and baffling the consolidation of power he hand-built over his eight-year rule in the executive.

He cedes the powerful post to Russia's youngest ever president, Dmitry Medvedev, who owes his ascension solely to Putin.

Whether the 42-year-old Medvedev - whose liberal, soft-spoken demeanour is the opposite of his former KGB boss Putin - can truly handle the reins of Russia's power vertical is hotly debated.

Critics highlight how closely the Kremlin stage-managed Medvedev's election hot on the heels of the winning by United Russia, the party headed by Putin, of a huge parliamentary majority in campaigns both overtly marketed under Putin's name as a vote for continued stability or "Putin's Plan."

Analysts see Putin quietly padding the shoulders of the premiership with several measures initiated in his last weeks in office.

On April 28, he amended a 2007 decree tweaking an important lever over regional governors.

They now have to report their performance to the Russian White House cabinet rather than answering to the Kremlin's staff.

"Putin has, in fact, simply formed a regional vertical of power under him, thereby strengthening the role of the prime minister," General Director Aleksei Mukhin of the Centre for Political Information told Russian daily Tvoi Den.

"Putin is acting logically. Now the governors will be accountable to the prime minister and the mayors will be accountable to the governors," Mukhin added, saying this was only the start in a "reconfiguration of power."

Other experts point to Putin and Medvedev's unambiguous promises not to tinker with the balance of power.

But even without alterations, Putin is set to become the strongest premier ever.

He will control both houses of parliament by heading the majority party, United Russia, a loyal bureaucratic mammoth whose ranks comprise almost all of Russia's business elite.

Through this bloc, he can impeach the president and easily pass constitutional amendments.

A February bill limiting foreign investment in 42 key sectors defined as strategic, including oil and gas, media and telecoms places premier Putin as the first head of the new commission deciding on investment requests.

Yet another draft now sailing through the State Duma will redistribute over 500 government duties to lower bureaucratic organs in a bid to streamline the premier post for Putin by ridding it of all that is routine and allowing him to focus on broader strategic issues.

Such detailed stitching, as seen in Putin's decision to head United Russia without joining the party, leave Putin free from being held responsible for bad legislation or party embarrassments and shows his preference for the tsar-like role promoted by his loyalist tag of "National Leader."

Who of the current administration remains in the Kremlin to look after Medvedev will be the next step to forwarding Putin's omnipotent image, despite a change in title.

But Medvedev has become popular in his own right, and his public regard is only likely to grow after his inauguration Wednesday, taking his place at the head of events such as a pompous military parade to commemorate Victory Day.

And constitutionally, Medvedev's hold over foreign policy is trump.

So Russia will effectively have two head honchos, leading analysts to throw up their hands in predicting who would be in charge.

Many highlighted the unprecedented situation as a source of future instability.

Putin's profit from the country's centuries-long tradition of autocratic and tsarist rule does not bode well for a power split at the top, they said.

A recent poll by the independent Levada Centre found 47 per cent of Russians favour the continuation of a strong executive.

The fear is that the Putin-Medvedev diarchy will reveal a gap with any differences of opinion and style possibly exploited in elite power struggles also leading to political deadlock.

In the case of a national crisis or a political scandal, observers wonder who might lead the nation and who might take the fall. (dpa)