Russian President Dmitry Medvedev has said Moscow will begin a comprehensive military rearmament from 2011.
Mr Medvedev said the primary task would be to "increase the combat readiness of [Russia's] forces, first of all our strategic nuclear forces".
Explaining the move, he cited concerns over Nato expansion near Russia's borders and regional conflicts.
Last year, the Kremlin set out plans to increase spending on Russia's armed forces over the next two years.
Russia will spend nearly $140bn (£94.5bn) on buying arms up until 2011.
Higher oil revenues in recent years have allowed the Kremlin to increase the military budget, analysts say. But prices have averaged $40 a barrel in 2009 compared with $100 last year.
Outdated equipment
In his first address to a defence ministry meeting in his capacity as supreme commander, Mr Medvedev said considerable sums are being channelled towards developing and purchasing modern military equipment.
Russian troops (file photo)
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"Despite the financial problems we have to cope with today, the size of these sums has remained virtually the same as planned."
Analysts say the brief war in Georgia exposed problems with outdated equipment and practices within Russia's armed forces and led to calls for military modernisation.
President Medvedev's remarks also appear significant for what they say about the diplomatic game between Moscow and the new administration in the United States, says the BBC's James Rodgers in Moscow.
Both sides are looking for a solution to issues - such as US missile defence plans in Europe - which bitterly divided the Kremlin and the White House during the Bush administration. Neither, though, seems willing simply to abandon previously-held positions, our correspondent adds.
The Russian Security Council is currently developing a new military doctrine which is expected to reflect current and forthcoming international developments, including any changes Nato may set out this year, missile defence deployments and WMD proliferation.
"The Security Council will approve Russia's national security strategy until 2020 in the near future," President Medvedev said.
Watch Tim Whewell's films on the Russian military on Newsnight on Tuesday 17 March and Wednesday 18 March, 2009 at 2230 on BBC Two.
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Subject: Russia announces rearmament plan 
Tue Mar 17, 2009 11:55 pm
