The Russian system, known as Glonass, will compete with the current U.S. Global Positioning System, or GPS, and the upcoming European Union's Galileo system.
The Glonass network of 24 geostationary satellites is scheduled to be in operation after 2008. Russia has already launched 17 of the planned system satellites, including three that were placed into orbit yesterday.
But Putin warned that some of these may be out of date by the time the navigation system is inaugurated unless the development is speeded up.
Meanwhile, a Russian rocket is scheduled to lift off from the Baikonur launch site in Kazakhstan on 28 December carrying the first test satellite for the EU's Galileo.