He also announced decorations for the seven members of the crew who spent several days trapped under water before a British submersible succeeded in cutting their craft free, and for British, Japanese and US rescue workers.

"President Putin has ordered that Admiral of the Fleet Vladimir Kuroyedov be relieved of his functions as commander in chief of the military fleet and returned to the armed forces," a Kremlin statement said without elaborating.

A second decree appointed Kuroyedov's deputy Vladimir Massorin as his replacement.

Putin referred to the "tragedies" suffered by the Russian navy when he received Kuroyedov, Massorin and defence minister Sergei Ivanov at his summer residence near Moscow.

"We knew in what condition the army was in 1997 (when Kuroyedov took charge). It was not the best legacy possible ... Since that time, we have not simply restored a significant part of the navy but also created a realistic programme for its development," he said.

"The latest manoeuvres, including those I attended, have proven that the navy is developing and this of course is a significant, positive part of your work.

"At the same time, there were difficult events, tragedies. We all know about that. But I would like to underline once again that with all these problems, all these tragedies, the main thing is that the navy is undergoing a revival."

The firing of Kuroyedov followed the inability of the Russians to free their mini-submarine when it became trapped in underwater antennae off Russia's Pacific coast. The incident was also kept secret until an anonymous caller told a radio station about it.

Massorin said at the time of the crisis that the Russian navy had the equipment needed to rescue the seven crew but had not been "capable" of using it because of "negligences".

"One of these craft was at the site of the catastrophe but when we tried to use it.. we wrecked it," he said.

"There were no specialists to use it: the inquiry will say why."

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