Russia must increase its population and develop its patriotic and spiritual values or lose its soul and face collapse, President Vladimir Putin said on Wednesday.

In his first State of The Nation address since he started a six-year third term in May, Putin mixed discussion of the need to fight corruption and improve state services such as schools with a theme of talk of the Russian identity and soul.

He issued a warning to the West and his own political foes, saying that foreign meddling in Russian politics was unacceptable and that politicians must not accept financial support from abroad.

On the world stage, he said Russia was counteracting those who sow chaos, an apparent reference to US military action abroad and Western support for government opponents in nations such as Libya and Syria.

But the focus in the speech to lawmakers in an ornate Kremlin reception room was mostly domestic -and Putin suggested the biggest threat to Russia was from a population that has fallen by millions since the 1991 Soviet Union collapse.

Russia's population fell to 141.9 million in 2011 from 148.7 million in 1992, according to the World Bank.

"If the nation is not capable of preserving itself and reproducing, if it loses its vital bearings and ideals, then it doesn't need foreign enemies - it will fall apart on its own," Putin said.

"For Russia to be sovereign and strong, we must be more and we must be better," he said in comments televised nationwide.

Putin reiterated warnings against extremism and calls for ethnic harmony, saying that despite the country's diversity "we are one people - Russians".

"We must not only preserve but develop our national identity and soul. We must not lose ourselves as a nation - we must be and remain Russia," he said in his 80-minute address.

Thirteen years after he rose to power, and more than two decades after the collapse of the Soviet Union, Putin still seems to be searching for an overarching idea to unite Russians.

With the patriarch of the Russian Orthodox Church sitting in the front row, Putin said it is crucial to "support institutions that are bearers of traditional values".

"It is painful for me to say this, but I must: Russian society today is experiencing an obvious deficit of spiritual bonds," Putin said. "Mercy, compassion and support for one another - a lack of those things that have always made us stronger, of which we always were proud."

In power since 2000 as president or prime minister, Putin has used annual appearances to shape an image of a strong leader in command of economic facts and figures.

But domestic pressure is growing on the Kremlin to translate oil and gas income into improvements in roads, schools, police, pensions, housing and healthcare.

Putin also said that businesses should not evade Russia's laws by operating through offshore tax havens. Capital has been leaving Russia at a rate of $80 billion per year.

Nine out of 10 major deals completed by Russian companies, including those in which the state has a stake, were not subject to Russian regulation, Putin said.

"We need a whole system of measures to 'de-offshore' our economy," Putin said, without announcing specific details.

Putin also said Russia's priority of future development would be eastward. "In the 21st century, Russia's vector of development is East. Siberia and Far East is our enormous potential. This is a chance to occupy a proper place in the Asia-Pacific region," he said.

Reuters-Xinhua