"We have no desire to create problems for the new Ukrainian leadership, but to tolerate a situation in which people living in the territory of Donetsk and Luhansk republic are generally deprived of any civil rights, this is already crossing the line from the point of view of human rights," President Putin said.
The new Russian rule has made it easier for separatist regions to receive a Russian passport within three months of applying. Ukraine and Russia have been at loggerheads since the annexation of Crimea by Russian forces in 2014.
"They cannot travel normally, they cannot meet their own elementary needs or exercise their elementary rights. It's a purely humanitarian issue," Putin said while giving the green signal to the new order.
Ukrainian president-elect Volodymyr Zelenskiy who recently won the elections by a landslide urged more international sanctions against Russia after Moscow's new move.
"Kiev is counting on increased diplomatic and sanctions pressure on the Russian Federation," Zelensky's press service said in a statement. Ukraine said it had informed the United Nations about Russia's move and also asked the EU to take "prompt and decisive" action.
According to a copy of the decree published on the Kremlin website, the law aimed to "protect rights" and was guided by "the norms of international law".
However, Ukraine's foreign minister Pavlo Klimkin said the decision was "the continuation of aggression and interference in our internal affairs."
"Russia has deprived you of the present, and now it is trespassing on your future," he said.
Iryna Gerashchenko, the deputy speaker of the Ukrainian parliament said: "Putin always uses moments of uncertainty and transition periods to plunge another knife into Ukraine's back."
Other Ukrainian leaders also condemned the move.
Ukraine and Russia have been at loggerheads since the annexation of Crimea by Russian forces in 2014.