Medvedev had agreed to step down after one term to allow his longtime mentor Vladimir Putin to reclaim the presidency in March's election. The swap was widely seen as a cynical maneuvering and a show of contempt for democracy, fueling a wave of unprecedented rallies in the run-up to the vote.
Medvedev raised hopes for liberal reforms after winning the presidency in 2008, but achieved little, largely staying in Putin's shadow, who continued calling the shots as prime minister.
In Tuesday's speech before the State Council, Medvedev repeated pledges to combat corruption, pursue political reforms and modernize economy.
He reaffirmed his mantra that "freedom is better than non-freedom" and promised to follow through on a political reform designed by the Kremlin in response to demonstrations that drew tens of thousands to demand an end to Putin's rule.
The reform envisages restoring direct elections of provincial governors, easing registration requirements for political parties and liberalizing election rules.
Medvedev said that the reform reflects a "higher level of political culture" and demonstrates that "democratic prospects have been secured."
Critics point out, however, that the next parliamentary elections are five years away and say that the bill on gubernatorial elections would allow the Kremlin to block hopefuls it dislikes.
Medvedev said that a fight against corruption would remain a top priority for his Cabinet, pledging to seek a greater public feedback and enhance the civil society's role in combating the graft.
He made similar calls throughout his presidency, but independent studies have indicated that corruption has continued to snowball in Russia and the size of the average bribe has doubled over the past five years. One study estimated that Russia's 143 million people paid about 164 billion rubles ($5.5 billion) in "everyday" bribes in 2010.
Medvedev also repeated his pledge to decrease the state role in the economy, improve business climate and soften punishment for economic crimes.
But despite the long-held promises, hopes that the president would pardon jailed oil tycoon Mikhail Khodorkovsky have never materialized and a probe into the prison death of lawyer Sergei Magnitsky, who was arrested by the same Interior Ministry officials he accused of corruption, has fizzled despite Medvedev's acknowledgment of official crimes in the case.
Putin announced Tuesday he would step down as the leader of the main Kremlin-controlled United Russia party after his inauguration on May 7. He said that the president should be a nonpartisan figure and suggested that Medvedev should succeed him as the party's head.
The move would allow Putin to distance himself from United Russia, which has been widely seen as a party of corrupt bureaucracy and dubbed by its critics as the "party of crooks and thieves."
By VLADIMIR ISACHENKOV
Associated Press
