30th December, 2016
He said Russia would not “stoop” to the level of “irresponsible diplomacy” but would work to restore ties with the US under President-elect Donald Trump.
Russia’s foreign ministry had formally asked Mr Putin to expel 35 US envoys.
The country denies involvement in hacking related to the US election, calling US sanctions “ungrounded”.
Prime Minister Dmitry Medvedev accused the outgoing US administration of President Barack Obama of ending in “anti-Russian death throes”.
Mr Obama, who will be replaced by Donald Trump on 20 January, had vowed action against Russia amid US accusations that it directed cyber-attacks on the Democratic Party and Hillary Clinton’s campaign.
Emails stolen from her campaign manager and from the servers of the Democratic National Committee – some containing embarrassing information for Democrats – were released during the election campaign.
This was a carefully stage-managed response from Mr Putin-dangling the possibility of tit-for-tat expulsions and then showing magnanimity in postponing any response – at least for now.
In a statement on the Kremlin website (in Russian), Mr Putin said: “We won’t be expelling anyone.
“We won’t be banning their families and children from the places where they usually spend the New Year holidays. Furthermore, I invite all children of American diplomats accredited in Russia to the New Year and Christmas Tree in the Kremlin.”
Mr Putin said Russia’s next steps would be “based on the policies pursued by the administration of president Donald Trump”.
He wished Barack Obama and his family a happy New Year, as well as Mr Trump and “the whole American people”.
Russia’s foreign ministry had reportedly suggested expelling 31 US diplomats from Moscow and four from St Petersburg.
It also suggested banning US diplomats from their dachas (holiday homes) in Serebryany Bor near Moscow and a warehouse on Moscow’s Dorozhnaya Street.
Russian media say the Russians facing expulsion from the embassy in Washington are struggling to buy plane tickets because flights are full ahead of the New Year holiday.
They will be forced to travel to New York, where their chances of finding plane seats are better, an “informed source” told Interfax news agency.
Russian foreign ministry spokeswoman Maria Zakharova has denied a report by CNN that Moscow is shutting down a school attended by diplomats’ children.
She said it was a “lie” that the Anglo-American School faced closure as retaliation.
Meanwhile, the Russian embassy to the UK tweeted a visual gag calling the Obama presidency a lame duck.
-BBC