Bjorn Again says it was paid £20,000 to play the gig 200 miles (320km) north of Moscow on 22 January.
Bjorn Again's manager Rod Stephen and other band members said Mr Putin danced to Abba hits and shouted "Bravo!"
The PM's spokesman denied the claim. Mr Putin - a former KGB spy who has a black belt in judo - is known in Russia and the West for his macho image.
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