The Russian president said in a speech at the Kremlin that Luhansk, Donetsk, Zaporizhzhia and Kherson would now come under Russian rule.
Mr Putin declared: "There are four new regions of Russia.” He added that people living in the regions would “become Russian citizens forever” before taking part in a formal signing ceremony.
The four regions were subject to referenda earlier this week, widely condemned by the West as sham votes, in which the Kremlin said it had won an overwhelming majority of support for the areas to become part of Russia. The annexations – and indeed the referenda themselves – have come under heavy international criticism.
Western governments, including the UK and the US, subsequently announced a round of fresh sanctions against Russia.
Russian forces do not fully control any of the four occupied regions, which comprise 18 per cent of Ukraine’s land. Ukraine still has control of large areas of Donetsk and Zaporizhzhia, where its troops are pushing forward to regain even more ground.
Mr Zelensky, whose office said he had not watched Mr Putin’s speech live, responded by saying Ukraine had signed an application for accelerated accession to Nato. He said his government wanted to take from “de facto” – something which is true in fact, but not officially sanctioned – to “de jure”, something which is in accordance with law.
"De facto, we have already made our way to Nato,” he said. “De facto, we have already proven compatibility with Alliance standards. They are real for Ukraine – real on the battlefield and in all aspects of our interaction. We trust each other, we help each other and we protect each other. This is the Alliance. De facto.
"Today, Ukraine is applying to make it de jure. By a procedure that is consistent with our value in protecting our entire community, in an expedited manner. We are taking our decisive step by signing Ukraine's application for accelerated accession to Nato.”
The Russian ambassador to London, Andrey Kelin, was summoned to the Foreign Office on Friday to be told of the UK's objections to the Kremlin's actions "in the strongest possible terms".
Under the new sanctions, Russia will lose access to UK services including IT consultancy, architectural services, engineering services and transactional legal advisory services for certain commercial activity. Britain is also banning the export of nearly 700 goods crucial to Russia's industrial and technological sectors, while the governor of the Russian central bank, Elvira Nabiullina, joined the list of senior figures subject to travel bans and asset freezes.
Hundreds of officials crowded into a grand hall at the Kremlin to hear Mr Putin speak. All four Russian-appointed leaders of the occupied regions being annexed were in attendance, as well as Russian defence minister Sergei Shoigu and foreign minister Sergei Lavrov.
Mr Putin called for a minute’s silence to remember “brave soldiers” who had died in what the Kremlin called a “special operation”.
The four regions were subject to referendums earlier this week, widely condemned by the West as sham votes, in which the Kremlin said it had won an overwhelming majority of support for the areas to become part of Russia.
"The results are known, well known," Mr Putin said, adding the referendums were “free expressions of will”.
He added: "I'm sure that the Federal Assembly will support the four new subjects of Russian Federation ... because this is the will of millions of people.”
Western leaders have staunchly criticised the annexation.
President of the European Commission, Ursula von der Leyen, said: “The illegal annexation proclaimed by Putin won’t change anything. All territories illegally occupied by Russian invaders are Ukrainian land and will always be part of this sovereign nation.”
Poland’s foreign ministry said it condemned the move “in the strongest terms”, while Romanian president Klaus Johannis said he would “firmly reject and unequivocally condemn the illegal annexation”.
A joint statement issued by the members of the European Council warned Russia was “putting global security at risk”.
It said: “We do not and will never recognise the illegal ‘referenda’ that Russia has engineered as a pretext for this further violation of Ukraine’s independence, sovereignty and territorial integrity, nor their falsified and illegal results. We will never recognise this illegal annexation.
"These decisions are null and void and cannot produce any legal effect whatsoever. Crimea, Kherson, Zaporizhzhia, Donetsk and Luhansk are Ukraine. We call on all states and international organisations to unequivocally reject this illegal annexation.”
Prime Minister Liz Truss had condemned the widely expected move ahead of Mr Putin’s speech.
Ms Truss said: "The UK will never ignore the sovereign will of those people and we will never accept the regions of Donetsk, Luhansk, Kherson and Zaporizhzhia as anything other than Ukrainian territory.
"Putin cannot be allowed to alter international borders using brute force. We will ensure he loses this illegal war."
Former prime minister Boris Johnson tweeted: "Vladimir Putin, your speech is a fraud and a disgrace. The world must never accept your sham referendums or your cruel and illegal attempt to colonise Ukraine.
"We stand with the people of Ukraine and will support them without flinching until their country is whole and free."
In his speech, Mr Putin said the annexed regions would be rebuilt. Many cities within them have been severely damaged in the conflict by Russian shelling.
He also heavily criticised the West for its “neo-colonial” world order.
"Who saw the new world order rules? Who discussed them?” he asked. “Russia is a great 1,000-year-old civilisation country and we will not live according to those rules – they do not apply to us.”
Mr Putin called on Ukraine to stop fighting and negotiate an end to the war with Russia. However, he said the territories which were subject to referenda would remain part of Russia at any cost.
"We will defend our lands with all the means at our disposal and do everything to protect our people,” he said. “This is our great liberating mission.”
In a lengthy rant against the US, Mr Putin covered the American war in Vietnam in 1954 to its ongoing “occupation” of Germany, Republic of Korea and Japan.
He claimed the West was taking grain out of Ukraine, ostensibly to distribute to third world countries, but were sending it to Western Europe.
“Again we see this lie, a direct deceit,” he said, adding the US wanted to “take over European markets”.
Military experts have warned the move could be used by Mr Putin to escalate tensions with the West. Once Russia claims control over these territories, any conflict on this land using weapons supplied from the West could be seen as an aggressive attack on Russia.
David Lewis, professor of international relations at the University of Exeter, said: "Putin's speech and the attempted annexation of Ukrainian territory raise the stakes dramatically. By attempting to annex Ukrainian territory, Putin has closed off any exit route for him from the war and bet his own political survival on a military victory. The speech marks a new level of anti-Western rhetoric from Putin. Putin clearly believes that this is now not only a war about Ukraine, but an existential struggle between Russia and the West on a much larger scale.
“These steps raise the risk of escalation between Russia and the West. International pressure on Russia will increase and Ukraine's military campaign will only intensify. Russia’s military control over the territories where it has held fraudulent referendums will remain precarious, even with mass mobilisation. A successful Ukrainian counteroffensive in the next few weeks would be humiliating for Russia and would narrow Putin’s options even further and risk further escalation by Moscow.”
Meanwhile, Russian strikes reported in four Ukrainian cities together amounted to the heaviest barrage Moscow has unleashed for weeks. It follows analysts' warnings that President Vladimir Putin is likely to dip more heavily into his dwindling stocks of precision weapons and step up attacks. In the Ukrainian city of Zaporizhzhia – one of the areas to be annexed – anti-aircraft missiles that Russia has repurposed as ground-attack weapons rained down on people who were waiting in cars to cross into Russian-occupied territory to bring family members back across the front lines.
A celebratory concert to mark the annexations is to be held in Moscow’s Red Square this evening. A similar rally took place in 2014, after the annexation of Ukraine's Crimea, which Putin attended, and at which he gave a speech.