Pope Benedict and President Medvedev held talks at the Vatican
Russia and the Vatican have agreed to establish full diplomatic relations, the Kremlin has announced.
Until now, Moscow only had an office of representation at the Vatican. The new status means full-fledged embassies will be established in Moscow and Rome.
The announcement comes after President Dmitry Medvedev met Pope Benedict XVI while on a visit to Italy.
The move follows improvements in relations between the Russian Orthodox Church and the Vatican.
Decades of distrust
"President Medvedev told Pope Benedict at today's meeting that he signed a decree concerning the establishment of full diplomatic relations with the Vatican," presidential spokeswoman Natalya Timakova told reporters.
"He asked the foreign ministry to lead discussions to establish the relations and raise the level of representation to apostolic nuncio and embassy," she added.
Since 1990, the two sides have maintained representation below the rank of ambassador.
The political detente follows decades of distrust between the Roman Catholic and Russian Orthodox churches.
The Orthodox Church has long accused the Catholic Church of seeking to convert Russians to Catholicism.
The Vatican says its activities in the country cater largely for traditional Catholic minorities like Poles, Germans and Lithuanians, who have faced discrimination and persecution in the past.
Property disputes between the churches have also put them at odds.
Relations have improved since Metropolitan Kirill took over as the leader of the Orthodox Church after the death of Patriarch Alexiy II in December 2008.