The private Embraer jet on which Prigozhin was travelling to St Petersburg crashed north of Moscow killing all 10 people on board on Aug. 23, including two other top Wagner figures, Prigozhin's four bodyguards and a crew of three.

Putin suggested the plane was blown up from inside, saying that the head of Russia's investigative committee had reported to him a few days ago.

"Fragments of hand grenades were found in the bodies of those killed in the crash," Putin told a meeting of the Valdai Discussion Club in the Black Sea resort of Sochi.

"There was no external impact on the plane - this is already an established fact," Putin said, seemingly rubbishing assertions by unidentified U.S. officials who said shortly after the crash that they believed it had been shot down.

Putin did not give any more details about how a grenade or grenades could have been detonated on board, but said he thought investigators were wrong to have not carried out alcohol and drug tests on the bodies of those who died in the crash.

"In my opinion, such an examination should have been carried out but it was not," Putin said.

He said that in searches of Wagner's offices in St Petersburg, the FSB security service had found 10 billion roubles ($100 million) in cash and 5 kg (11 pounds) of cocaine.

The investigators of the crash have yet to report publicly on the cause. Neither Wagner nor Prigozhin's family could be reached to comment on Putin's remarks.

WAGNER'S FUTURE

Prigozhin died two months after leading a brief mutiny against Russia's defence establishment that posed the biggest challenge to Putin's rule since the former KGB spy came to power in 1999. Western diplomats say it exposed the strains on Russia of the war in Ukraine.

The Kremlin has rejected as an "absolute lie" the suggestion that Putin had Prigozhin killed in revenge.

The fate of Wagner has been unclear since Prigozhin's mutiny and his death, after which Putin ordered Wagner fighters to sign contracts with the defence ministry which Prigozhin and many of his men had opposed.

When asked about the future of so called private military companies in Russia, Putin said that as there had been no law on such groups, the experience of them in Russia had been "clumsy".

"We do not yet have a consensus in Russia about whether we need such formations or not, but today I can say for sure that several thousand fighters of this company have already signed contracts with the armed forces," Putin said.

"And if they want to, then they will take part in the fighting. They do this on the basis of signed individual contracts, which was not the case before," he added.

Before his death Prigozhin cast Wagner, which once had tens of thousands of men, as the world's most battle-hardened fighting force.

He accused Putin's top military brass, Defence Minister Sergei Shoigu and General Staff Valery Gerasimov, of incompetence and warned that Russia could lose the war in Ukraine unless it raised its game.

Putin said it was the defence ministry which had originally asked him to approve the use of Wagner in Ukraine - and that its men had fought heroically.

He was ambiguous about the future of private military companies, and their standing in Russian law.

"This is a complicated process, we are discussing and thinking about it," Putin said.

"In many countries, such companies exist, are actively working and, above all, they work abroad, we all know this well. Whether we need them or not, we will think about it."