The former KGB officer, who Britain wants to stand trial for the poisoning of Litvinenko last November, has been approved as number two Liberal Democratic Party (LDPR) candidate for the lower house of parliament, the State Duma, in the December elections.
If the millionaire businessman, who owns a private security company, becomes a member of parliament, he will receive immunity from prosecution under Russian law.
The number one name on the LDPR list is its leader outspoken pro-Kremlin ultranationalist Vladimir Zhirinovsky, and the third is Igor Lebedev, Zhirinovsky's son, who also chairs the LDPR faction in the State Duma.
Zhirinovsky described Lugovoi as "a valuable addition to the party list."
He said his party intends to garner at least 20% of the vote, or up to 90 seats in the lower house.
Lugovoi rejected earlier Monday an out of court settlement offered by Russian newspaper Kommersant which he is currently suing for publishing an article he said portrays him as a murderer.
The paper offered to publish an interview with the businessman.
But Lugovoi's lawyers said their client is standing firm on his demand for a retraction and 20 million rubles (about $790,000) in compensation for damage to his reputation
Lugovoi took legal action over the business paper's article printed on July 9.
The paper said that "after Britain's Crown Prosecution Service accused him of murdering... Litvinenko, Lugovoi was the first to speak out about his victim's ties to British intelligence services."
Lawyer Tatyana Stukalova said: "My client believes by saying that he [Lugovoi] was the first to speak out about his victim's ties [with British intelligence services]' ... the paper's readers were given a biased opinion, portraying Lugovoi as the culprit."
"We believe the article provides untruthful information, and tarnishes Lugovoi's self-respect and business reputation," she said.
Russia's refusal to extradite Lugovoi to the U.K. has proved a major source of contention in relations between the countries, and in July sparked a tit-for-tat row involving expulsions of diplomats and visa restrictions.
Moscow has denied London's extradition requests citing its Constitution, which bars the extradition of Russian nationals. Russian authorities said they could try Lugovoi at home if Scotland Yard investigators provide substantiated evidence.
