MOSCOW - Foreigners seeking to thwart Russia's resurgence are funding opposition groups in a move to seize control of the country's economic and political agenda, President Vladimir Putin said Thursday in his annual state of the nation speech.

Putin also declared in the speech, delayed two days by the death of his predecessor, Boris Yeltsin, that he will not seek a third term.

But he refused to suggest a successor amid speculation that he seeks to remain in power behind the scenes.

Putin's second term in office ends in 2008, and he is constitutionally barred from seeking a third. While many observers have suggested he would try to stay in office, Putin again dismissed the idea.

"The next state of the nation address will be given by another head of state,'' he said.

He acknowledged expectations that he would take advantage of his speech to reveal his choice for a successor, then drew a laugh by saying: "It is premature for me to declare a political will.''

Russia enters a high-stakes political season this year with parliamentary elections in December, followed by presidential elections in March.

Russian officials in recent months have complained that western countries are trying to meddle in the political process by funding protest groups, and Putin echoed those allegations.

"There is a growth in the flow of money from abroad for direct interference in our internal affairs,'' Putin said in his address, delivered to members of both houses or parliament.

"There are those who, skilfully using pseudo-democratic rhetoric, would like to return to the recent past _ some to loot the country's national riches, to rob the people and the state; others to strip us of economic and political independence,'' Putin said.

Putin did not cite specific countries as sources of the funding. The Foreign Ministry this month complained extensively about U.S. funding of democracy-promoting organizations in Russia they say have a hidden agenda.

Officials contend that such funding aims to provoke mass opposition protests such as those that helped propel pro-western leaders into power in neighbouring Georgia and Ukraine in recent years.

Police have cracked down on a string of opposition protests this year, beating some demonstrators and detaining hundreds.

Opposition forces accuse Putin of strangling democracy through an array of measures to centralize power and increase the influence of large political parties such as his allied United Russia party, which dominates the Russian parliament.

This year's parliamentary elections will see seats distributed entirely on a party-list basis, eliminating the opportunity for small parties to win seats through strong local support in particular districts -- a change critics argue is aimed at smothering opposition.

But Putin, in his speech, described it as part of "a revolutionary step modernizing the elections system ... (it will) help the opposition widen its representation.''

Putin launched another attack on the West over the Conventional Forces in Europe Treaty, whose amended version was signed in 1999 to reflect changes since the Soviet breakup.

Russia has ratified the amended version, but the United States and other NATO members have refused to do so until Moscow abides by its commitment to withdraw troops from the former Soviet republics of Moldova and Georgia.

"Our partners are behaving incorrectly, to say the least,'' Putin said. "I consider it worthwhile to declare a moratorium until all NATO countries ratify it ... and begin to strictly abide by it,'' Putin said.

The death Monday of Yeltsin has drawn new attention to complaints that Putin is heading the country away from democracy. Yeltsin, as Russia's first post-Soviet leader, worked changes that encouraged pluralism and nudged the country toward democracy.

But Putin clearly aimed to portray himself as the curator of Yeltsin's legacy. He began the speech by calling for deputies to stand in silence in memory of Yeltsin and later called for a national library to be established in his name.

Putin also praised the development of Russia's economy, which has soared during his presidency, driven largely by high world oil prices.

But he called for more revenues to be applied to improving the lives of its citizens, many of whom have been left behind in the boom and find themselves with insufficient pensions and unable to afford to move out of deteriorating Soviet-era housing.

He proposed a US$10-billion fund to repair housing and resettle residents, saying "It is inadmissible for a country with such reserves accumulated from its oil and gas revenues to be at peace with the fact that millions of its citizens live in slums.''

Putin also called for initiating a program under which the government would match money citizens put into private pension plans.