American lawmakers threatened worse, from demanding Russia forfeit its right to host a summit of the world's biggest economies to questioning whether Washington and Moscow can now cooperate at all. Some in Congress have spoken of boycotting next year's Winter Olympics in the southern Russian city of Sochi.

"Russia's action today is a disgrace and a deliberate effort to embarrass the United States. It is a slap in the face of all Americans," Republican Senator John McCain said. "Now is the time to fundamentally rethink our relationship with Putin's Russia."

Retaliation against Russia comes at a cost, however. Putin has proven over more than a decade in power that he'll respond to perceived offences from the United States, whether in the form of a missile defence network in Europe or US support for pro-democracy demonstrations in Ukraine, Georgia and other neighbouring nations. And for all the tough talk in Washington, the US knows it needs Putin to promote a range of American national security interests and has tried to temper its reaction to Putin's provocations.

Without the Kremlin's help, the US would have a harder time containing terrorist groups in the south Caucasus, ensuring supply routes to US troops in Afghanistan and preventing Iran from developing nuclear weapons.

And it would have zero chance of persuading Syrian President Bashar al-Assad to join rebels in peace talks to end a war that has killed 100,000 people, involved competing claims of massacres and chemical weapons use, and pulled Washington and Moscow onto opposing sides.

The administration's first reaction to Snowden's asylum was condemnatory but cautious.

"We are extremely disappointed that the Russian government would take this step despite our very clear and lawful requests in public and private that Mr Snowden be expelled and returned to the United States," White House press secretary Jay Carney said.

The US has demanded that Russia send Snowden home to face prosecution for espionage over his leaks that revealed widespread US telephone and internet surveillance.

For more than a month, Russian authorities left him stranded at the airport in Moscow after he flew there from Hong Kong, unwilling to grant him temporary residence or travel documents that he could use without a valid US passport to travel on to Latin America.

The saga ended on Thursday, when Snowden was granted a one-year stay.

However, even Putin has seemed intent on limiting the fallout. Before the decision, he said asylum would be contingent on Snowden refraining from leaking any more materials - suggesting that even as the Russian leader considered knowingly provoking the United States, he didn't want to harbour a fugitive who would seek to flaunt his safe status beyond the reach of American law enforcement.

Paul Saunders, executive director of the conservative Centre for National Interest think tank, said the administration erred in exerting worldwide pressure to prevent Snowden from finding a new home.

"The administration backed Moscow into a corner, thinking that would press them to give in," he said. "In fact, it just made them harden their position."

Carney declined to outline what consequences Russia might face. He suggested only that Obama was reconsidering his upcoming tête-à-tête with Putin, which was supposed to focus on the Syrian civil war and righting a relationship with Russia that the US president already tried to "reset" once after taking office in 2009. Cancelling the meeting would be a surprise, however, considering that Obama was willing to meet despite Russia's ban on US adoptions, its crackdown on pro-democracy groups and gay rights organisations, and its continued military and diplomatic support for the Assad regime.

Democratic Senator Chuck Schumer spelled out one possible form of retaliation, calling on Obama to recommend moving the G-20 summit of world leaders in St Petersburg on September 5-6.

"Russia has stabbed us in the back, and each day that Mr Snowden is allowed to roam free is another twist of the knife," Schumer said.

The Senate had already been working on sanctions against any country prepared to help Snowden avoid extradition to the United States. The measure introduced last week by Senator Lindsey Graham demands that the State Department co- ordinate with lawmakers on setting penalties against nations offering Snowden asylum. The Senate panel backed Graham's proposal, without objections.