The proposed agency will "implement measures directed at fortifying the unity of... The Russian nation," it said.
It will also chalk out "preventive measures" against racial or religious discrimination and thwart attempts to "instigate hatred" the decree said.
The body will further regulate Moscow's cooperation with Cossacks, the nationalist semi-militarised groups whose ancestors were used to expand and strengthen the frontiers of imperial Russia.
Modern Cossacks have been engaged in police patrols, particularly in southern Russia, and are a major support base for the Kremlin's conservative drive to promote "traditional values", including Orthodox Christianity.
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Putin said in a meeting with Prime Minister Dmitry Medvedev today that issues of nationality "deserve to be raised to a higher level".
"Russia is a multinational country, we have over 100 ethnicities," he said.
Putin has launched increasingly nationalist policies since returning to the Kremlin for a third historic term in 2012.
He has also voiced growing concern for rights of Russian speakers in other countries, especially in Ukraine where a conflict has raged for a year between Kiev and pro-Russian separatists allegedly supported by Moscow.