Immigrants from former Soviet Union countries have entered Russia in large numbers. One result has been an increase in xenophobia and racist attacks on foreigners, Novosti reported.
Streamlined procedures for visas should be in place by January 15, Putin said.
"I think we will be understood if we cope with illegal immigration and simultaneously ease procedures to legalize those working and living in Russia," Putin told a forum on the issue.
Putin also said that criminal groups control most of Russia's markets, where sellers tend to be from former Soviet republics or from China and Vietnam.
In August, a bomb exploded in a Moscow market, killing 11 people and injuring 49. Most of the victims were Asian.
In September, a fight in a restaurant between Russians and Chechen immigrants in the northern town of Kondopoga left two Russians dead.