Russia has been trying to host a Formula One race since the late Soviet era and Sochi has beaten off interest from Moscow, as first revealed by insidethegames in June.

The six-year deal also includes an option to extend it for a further five and was announced to coincide with the latest visit of the International Olympic Committee (IOC) Coordination Commission monitoring preparations for the 2014 Olympics and Paralympics.

A $600 million (£375 million) circuit - that could be located in the Olympic Park currently under construction for the Games in 2014 - is expected to be funded by a group of sponsors including Russian state holding firm Rostekhnologii, mobile provider Megafon, oil company LUKoil, and aluminium producer RusAl.

"We have reached an agreement with the principal owner of Formula One [Ecclestone]," Putin told Russian business leaders in Sochi.

"Formula One isn't only the most prestigious competition in motor sport, but it also demonstrates achievements in car manufacturing."

The Black Sea resort is hosting the Winter Games in 2014 and that could see the opening race put back a year if necessary, said Deputy Prime Minister Dmitry Kozak, who is overseeing the preparations on behalf of the Government.

Russia is the latest confirmed addition to an already expanded calendar, with a record 20 races scheduled for next year.

"I sincerely hope that the Formula One is going to play a big part in what I can see happening in Sochi," said Ecclestone, the chief executive of Formula One Management.

"I'm sure the circuit can be a super circuit.

"It's all the things we need and wanted, and we are very happy.

"They are trying to build absolutely first-class facilities both for the Olympics and the Formula One."

In July, Ecclestone said Formula One needed to be in Russia more than any other candidate for a race.

"For us it's an important event because it would be possible to use effectively everything we have created for the Olympic Games in 2014," said Putin.

Russia has its first Formula One driver in Renault's Vitaly Petrov, although his place at the team in 2011 has yet to be confirmed due to his inconsistent performances.

Petrov has, however, attracted several Russian sponsors to his team including part Renault-owned carmaker Lada.

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