The laws, passed by parliament last year, are designed to streamline the red tape foreigners have to go through to live and work in Russia legally but will also reduce their numbers.

One change will implement a gradual ban on foreigners working as traders in outdoor markets where immigrants dominate, causing friction with ethnic Russians.

"We want to get rid of illegal immigration," said Denis Soldatikov, a spokesman for the Federal Migration Service.

Up to 12 million migrants from ex-Soviet states, China and Vietnam are estimated to be in Russia, working on building sites, on farms, as street sweepers and in outdoor markets.

Because the bureaucracy makes it almost impossible to obtain all the right documents, more than 90 percent of them are working illegally.

However, Russia's population is shrinking because of the low birth rate and life expectancy. It is expected to contract by another 700,000 to 141.7 million this year, so Russia needs at least 1 million more immigrants every year to keep its economy running.

But massive immigration has become a major factor fuelling racism among many Russians, who fear the influx of foreigners will dilute the country's ethnic make-up.

Members of Mestnye (Locals), one of several anti-immigrant groups that has sprung up in Russia, picketed Azerbaijan's embassy in Moscow on Monday accusing the ex-Soviet state of encouraging illegal immigration to Russia.

President Vladimir Putin has urged his ministers to "protect the native population" when streamlining immigration.

Under the new laws, immigrants will be free to apply for work permits within the annually established quotas. About 6 million foreigners will be allowed to work in Russia in 2007.

"This is a clear attempt to liberalize the temporary labor migration," said Galina Vitkovskaya, an expert for the International Organization for Migration.

But Vitkovskaya said the government was keeping tough controls to regulate immigration.

"An immigrant will see the benefits of the new rules only if he comes for a year or less," Vitkovskaya said. "If he comes for longer, he will face the same old headaches."

"I have heard it from many senior officials that Russia was interested in short-term labor immigration to discourage migrants from settling down," she added.

Vitkovskaya said some of the new laws -- especially the one on markets -- were ill-considered. It requires that foreigners in markets be replaced with Russian nationals by 2008.

Many markets, which offer goods at low prices, are dominated by foreigners -- the Chinese in the Far East and nationals of ex-Soviet states in European Russia.

Television pictures on Monday showed rows of locked shops at a market in the Far Eastern city of Vladivostok heavily dependant on traders from neighboring China.

"The move was harmful because it will undermine trade," Vitkovskaya said. "I only hope no one is going to abide by it."

But deputy Federal Migration Service head Vyacheslav Postavnin disagreed, saying the markets will adjust.

"There are Russians to be hired," he told Rossiiskaya Gazeta daily. "Market owners will make sure that their business continues." Reuters