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Navalny had called for demonstrations in more than 90 towns and cities across Russia against what he says is Putin's autocratic, tsar-like rule.
Before his detention, he briefly addressed supporters in central Moscow, leading them in chants of 'Down with the Tsar!".
"They said that this city belongs to Putin. Is that right?" Navalny asked his supporters. "Do you need a tsar?" he asked, eliciting a collective roar of "No!"
Putin won re-election overwhelmingly in March, extending his grip over Russia for six more years - a tenure of 24 years that would make him Moscow's longest-serving leader since Soviet dictator Josef Stalin.
Navalny, who was barred from running in the election on what he says was a false pretext, was detained soon after showing up on Moscow's Pushkin Square, where young people were chanting "Russia without Putin!" and "Putin is a Thief!".
Video footage showed five policemen hauling him to a waiting van by his arms and legs, a scene that was repeated dozens of times with his supporters.
Another opposition politician, Ilya Yashin, said police planned to charge Navalny with disobeying a police officer. The penalty for such an offence, if repeated, can be a fine and up to 30 days in jail.
Early on Sunday, shortly after the midnight, Navalny said on Twitter that he had been released by the police pending court.
"NOTHING WILL CHANGE"
Navalny, who has been detained and jailed numerous times for organising similar protests, said he was proud to have made it to the rally.
One protester in Moscow, wearing a rabbit's mask with the legend "Tsar of the Animals", said he was unsure what the protest would achieve.
"I have the feeling that people are gathering just to let off steam and that nothing will change," said the 31-year-old man called Alexander, who declined to give his surname.
A police spokesman said around 1,500 people had protested in Moscow, of whom around 300 had been detained, the Interfax news agency reported. Reuters reporters estimated the crowd numbered several thousand.
Protests also took place in the Far East, Siberia and St. Petersburg, where Interfax cited the police as saying around 200 people had been detained. In the city of Yekaterinburg, around 1,500 km (900 miles) east of Moscow, a Reuters reporter saw over 1,000 people protesting and shouting anti-Putin slogans.
FATHER OF THE NATION
Putin, 65, has been in power, either as president or prime minister, since 2000.
Backed by state TV and the ruling party, and credited with an approval rating of around 80 percent, he is lauded by supporters as a father-of-the-nation figure who has restored national pride and expanded Moscow’s global clout with interventions in Syria and Ukraine.
The authorities regard most of the protests as illegal, arguing that their time and place was not approved beforehand, and that the police have a duty to protect public order.
Putin has dismissed Navalny as a troublemaker bent on sowing chaos on behalf of Washington. Prime Minister Dmitry Medvedev, a close Putin ally, has called Navalny a political charlatan.
Putin is due to be inaugurated on Monday in a Kremlin ceremony heavy on pomp.
With more than 56 million votes, almost 77 percent of the total, his March election win was his biggest ever and the largest by any post-Soviet Russian leader, something he and his allies say gave him an unequivocal mandate to govern.
European observers said there had been no real choice in the election, and complained of unfair pressure on critical voices. Critics like Navalny accuse Putin of overseeing a corrupt authoritarian system and of annexing Ukraine’s Crimea illegally in 2014, a move that isolated Russia internationally.