Embattled Moscow mayor Yury Luzhkov returned to work on Monday after a week on vacation, confounding those in the government who had pressured him to quit.
The veteran mayor, who turned 74 last Tuesday, returned from Austria on Sunday, after the Kremlin had reportedly given him a week to ponder his exit strategy.
Luzhkov said on Monday he had no plans to resign, despite broad expectation that he will announce his departure at a City Hall meeting on Tuesday.
Luzhkov, an old ally of Prime Minister Vladimir Putin and one of Russia's most powerful politicians, is said to have fallen out with President Dmitry Medvedev in August over the president's decision to freeze construction of a new highway through a forest north of Moscow.
Kremlin insiders said the row had been going on for months. Putin has so far remained silent on the issue.
Earlier this month, Kremlin-backed TV channels broadcast a series of documentaries and news reports accusing Luzhkov of corruption, abandoning his subjects during the summer smog crisis, failing to solve the city's notorious traffic problems, and using his power to help his wife, Yelena Baturina, amass her estimated $2.9 billion fortune in construction.
Baturina, the world's third richest woman, has said her husband has been caught in the crossfire between Medvedev and Putin ahead of the 2012 presidential elections, as Russia's powerful prime minister looks set to return to his old office in the Kremlin.
Although many would like to see the back of Luzhkov, who has held his position since 1992, he remains broadly popular with Muscovites. Luzhkov has said he will see out his tenure, due to expire next June, no matter what.
Medvedev hopes for a conflict-free exit for the mayor, a source close to the presidential administration told Vedomosti newspaper on Monday. The mayor will most probably be demoted rather than merely sacked, the source said.
The president should act decisively, analysts say, if he wishes to have a crack at a second term. Failure to do so will merely boost the public's perception of Putin as the man who really runs Russia.
MOSCOW, September 27 (RIA Novosti, by Alexei Korolyov)
