Moscow's planned sale of the air defence systems to Damascus is one of the principle bones of contention between Russia and Israel, which could threaten to overshadow the first ever visit by a Kremlin leader to the Jewish state.

"The system we are going to supply to Syria is short range and poses no threat whatsoever to Israeli territory," Putin told a news conference.

Justifying the decision to press ahead with the missile sale, he said that some 25 percent of Israel's population is of Russian origin, adding: "We want those people to live in security".

"We are not planning to do anything that would upset the balance of forces in the region," Putin insisted.

He also pointed out that nine billion dollars worth of weapons was sold to the Middle East from countries across the globe.

"Russia is delivering less than 500 million dollars to the Middle East so what can be the reason for worry by our Israeli partners?" he said.

Israeli President Moshe Katsav admitted there were "disagreements" with Moscow on the planned missile sale to archfoe Syria.

The Israeli government fears the short-range Strelets missiles would not only arm an unfriendly neighbour, but could also fall into the hands of militants. Katsav said they "risked reducing Israel's abilities to fight terrorism".

Yet diplomacy appeared to be making progress over Russia's continued support for Iranian nuclear activities, assistance that Putin insisted was purely civilian. Moscow, like Washington and Israel, opposes Tehran acquiring a nuclear weapon.

"We are working with Iran in order to develop the atom for peaceful ends and we are against any programme seeking to endow Iran with an atomic weapon," Putin said.

The Jewish state and the United States have campaigned for Iran to be referred to the UN Security Council to face sanctions over its atomic activities, which Tehran insists are purely peace.

But Katsav appeared to suggest that the policy gap between the two powers over Iran was narrowing.

"I feel there is some forward movement," he said. An Iranian atomic arsenal would transform the balance of power in the region, where Israel is widely considered to be the sole, if undeclared, nuclear force.

Just ahead of Putin's groundbreaking visit to improve ties with the Jewish state, Washington announced that it planned to sell Israel 100 of its most effective bombs designed to destroy deep underground facilities.

"The general suspicion would be that Iran would likely be on the receiving end of that weapon," Francois Boo, an analyst from the military affairs think tank GlobalSecurity.org, told AFP.

Putin later went into talks with Prime Minister Ariel Sharon, who paid tribute to the Soviet Union's role in World War II.

"We will never forget how the Soviet Union freed the Nazi concentration camps," army radio quoted him as saying

Earlier, a Sharon aide said Israel would oppose any supply of Russian military equipment to the Palestinians unless they do more to crack down on militant groups.

"We will not allow the Palestinians armoured troop carriers as long as they dither in unleashing a war against terrorism," said the official.

Palestinian envoy to Moscow, Khairi al-Aridi, has said Putin would offer Palestinian leader Mahmud Abbas 50 armoured vehicles during their talks Friday when Putin will become the first Russian head of state to visit the West Bank.

The Russian president hailed an opportunity to bring peace to the Middle East and said he was anxious to bolster anti-terrorism cooperation with Israel.

Yet he was likely to enact a cool response from Sharon for his idea for a Middle East peace conference.

So far only the Palestinians have unconditionally welcomed the proposal from Russia, which along with the United States, the European Union and the United Nations, is one of the sponsors of the plan for Middle East peace.

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