The plans for the base at Tartus on the coast of Syria would allow the facility to accommodate bigger warships.
Currently the base is classed as a ‘repair and replenishment’ facility and can only deal with four vessels at any one time.
But dredging work and new piers would make space for up to 11 warships, as well as Russia’s largest battlecruiser, the nuclear-powered Pyotr Velikiy.
Tartus is Moscow’s only naval base outside of the former Soviet Union, and the warm waters of the Mediterranean would give Russian ships access to the Middle East and north Africa all year round.
The announcement comes just days after Mr Putin ordered a “significant contingent” of Russian troops home from war-torn Syria.
The Kremlin has declared victory against Islamic State (ISIS) militants in the Middle Eastern country, though a US-led coalition disputes this.
Moscow has been supporting Syrian President Bashar al-Assad in the bloody civil war which has raged for more than six years.
And as a ‘thank you’ for the backing, Damascus gave the green light to an expansion of the Tartus base in January.
And as part of the agreement, Russia would be allowed to use the facility for 49 years.
Russian submarines lurking in the Mediterranean have been spotted launching cruise missiles against ISIS targets in recent months.
And speaking at an annual news conference in Moscow today, Mr Putin called on “good-willed people around the world” to help destroy the terrorist group.
He said: “One of the sources of terrorism is low levels of education and material comfort Syria cannot manage this on its own, and Russia alone cannot manage this.
“We are ready to take part in this but only through common efforts.
“It is very important for all participants in this process and global players to have no desire or temptation to use terrorist, quasi-terrorist, radical groups to achieve their political objectives.”