Russia intends to use prisoners to help build stadiums and infrastructure for the 2018 World Cup and bring costs down.
A bill drafted by a member of the ruling party, United Russia, with the backing of the country's prison service, would allow contractors to use convicts in their projects.
"It'll help in the sense that there will be the opportunity to acquire building materials for a lower price, lower than there is currently on the market," Alexander Khinshtein told The Associated Press.
The Russian government is currently under pressure for the event's projected cost of 640bn roubles (£8.2bn).
Under the plans, convicts would continue to live in prison, travelling to work each day. They would earn roughly £190 per month.
Russian Prime Minister Dmitry Medvedev said in an interview broadcast by Russian TV that it would adopt a tough position if Ukraine decided not to pay off debts owed by its previous government.
"If it is actually formulated in this way this would undoubtedly be a default of Ukraine ... We would adopt as tough a position as possible in this case and defend our national interests," Medvedev told the Vesti on Saturday programme on state TV channel Rossiya.
Medvedev also said his government had an interest in seeing a predictable rate for the rouble, but he defended the central bank's policy of allowing the rouble to float, saying it was "optimal" to achieve a balance in the forex market between supply and demand.
The Ministry of Defence has said at no time was there a perceived threat from Russia planes that were tracked flying towards UK airspace.
The two Russian Bear military aircraft were escorted by RAF Typhoon fighters after they were scrambled when the initially unidentified aircraft were spotted flying North of Scotland.
It is the latest of similar incidents involving Russian military aircraft flying close to UK airspace in recent months.
RAF Typhoon fighter jets have intercepted Russian aircraft that were tracked flying towards UK airspace earlier today.
The jets were scrambled from RAF Lossiemouth and escorted the Russia Bear aircraft until they were out of the UK area of interest, an RAF spokesperson said.
"The aircraft were identified as Russian Bear aircraft which were escorted by the RAF Typhoon fighters until they were out of the UK area of interest.
"At no time did the Russian military aircraft cross into UK sovereign airspace", the spokesperson added.
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US Secretary of State John Kerry is set to meet with Russian President Vladimir Putin in Russia today to discuss the ongoing conflicts in Ukraine and Syria.
Kerry is reportedly planning to try to gauge Putin's willingness to push pro-Russia separatists in Ukraine to comply with the current fragile ceasefire and also to try and establish how supportive Russia are towards Syrian President Bashar Assad.
The US State department have described Kerry's trip to Sochi as part of an "ongoing effort to maintain direct lines of communication with senior Russian officials".
Kerry is also expected to lay a wreath at a World War II memorial during his visit before departing for a Nato meeting in Turkey later in the day.
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Members of a nationalistic Russian bikers club have laid a wreath at a monument to the Russian soldiers who liberated Vienna from the Nazis.
The pro-Kremlin Night Wolves are on a ride commemorating the Russian and Allied defeat of Nazi Germany 70 years ago in the Second World War.
They started in Moscow and are hoping to end in Berlin on May 9.
Some EU officials have expressed criticism of their plans and Poland denied them entry, reflecting strains between Warsaw and Moscow over Russia's role in the Ukraine conflict.