By another decree Vladimir Putin has appointed Sergei Ivanov as Special Presidential Representative for Environmental Protection, Ecology and Transport.
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Mr Putin appointed him chief of staff on his return to the Kremlin in 2012.
The former Prime Minister led the charge for sanctions against Russian Federation for its actions in Ukraine.
It was once thought that Mr Ivanov might become president of Russian Federation after Mr Putin’s second term, as a third term for Mr Putin would have been unconstitutional.
Ivanov, a former KGB officer, ex-defense minister and ex-deputy prime minister, has been seen as one of Putin’s closest allies.
Vladimir Putin said he respects the decision of Sergey Ivanov to leave his post of Kremlin chief of staff. Ivanov himself recommended that Anton Vaino should become his successor, Putin said. And tension with Ukraine is escalating over Russian claims that Ukraine attempted to stage a terrorist attack in Crimea; Russia deployed powerful S-400 air defence systems to Crimea, while Dmitry Medvedev, the prime minister, warned that diplomatic relations with Ukraine could be severed.
Ivanov has been Putin’s chief of staff since December 2011.
Ivanov is the latest long-standing Putin ally to have been sidelined in what analysts described as Putin’s attempt to bring in a new, younger entourage.
Putin, in a Kremlin meeting shown on state TV, told Ivanov that the pair had worked well together.
Mr Ivanov kept his seat on the Security Council, Russia’s main security body, which discusses war and peace and includes the president, chairmen of parliament and the chiefs of the security services.
Putin said he hopes that the presidential administration led by Vaino would continue working efficiently. Born in Tallinn to a Soviet political family, Vaino is the grandson of Karl Vaino, the first secretary of the Estonian Communist Party from 1978 to 1988.
The switch, made at a time when Russian Federation is grinding its way through a prolonged economic crisis, comes just over a month before nationwide parliamentary elections and follows a reshuffle of regional leaders last month.
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Putin recently reshuffled a string of top regional officials in a move experts say is aimed at helping the Kremlin shore up the vote across the country. In a televised meeting, where Putin accepted Ivanov’s resignation, Putin thanked him and said the remembered their agreement that he would not ask Ivanov to serve as chief of staff for more than four years, saying, “I understand your wish to move to another area of work”.
