By Timothy Heritage

MOSCOW (Reuters) - Russian President Vladimir Putin replaced the chief of his military staff on Friday in a reshuffle that stamped the authority of the Kremlin chief, and his new defense minister, on the armed forces after a corruption scandal.

Putin removed General Nikolai Makarov after four years as the nuclear power's top general and replaced him with General Valery Gerasimov, 57, a commander who fought Muslim separatists in the Chechnya region.

Changes had been expected to allow new Defense Minister Sergei Shoigu to bring in his own team after replacing Anatoly Serdyukov, sacked on Tuesday after an investigation began into suspicious sales of ministry property to insiders.

Putin told Gerasimov to press on with reforms to modernize the armed forces and, hinting at tensions that had mounted under Serdyukov's stewardship, the president told him to improve relations with the defense industry.

"I hope very much that you and the minister will be able to build a good and stable relationship with our leading enterprises in the defense ministry," Putin said during a televised meeting with Gerasimov and Shoigu.

Referring indirectly to Serdyukov's poor ties with industry chiefs he had chided for not developing better weapons, Putin said: "We have recently run into changing demands of the defense industry from the Defense Ministry. Of course we must strive to have cutting edge items, but we need a certain stability too."

Gerasimov, deputy chief of the general staff since 2010, was also appointed first deputy defense minister. Putin also named Arkady Bakhin, commander of Russia's western military district, as another first deputy defense minister.

SHOIGU STAMPS AUTHORITY

The rapid overhaul of the military was intended by Shoigu to assert his authority on the armed forces and to show that Putin, the commander in chief, is firmly in charge despite the scandal.

Putin's remarks also indicated the political importance of the defense industry as its many workers, and voters, spread across the vast country depend on regular state orders for their livelihood.

Putin convincingly won a six-year third term in March but also faces a challenge from urban protesters which he wants to prevent spreading to the provincial areas on which he depends for much of his support.

Although Serdyukov was sacked soon after the start of the corruption investigation, it may not have been the main cause of his downfall.

He had many political enemies - including in the Kremlin - who were jealous of his control of the ministry's huge budget and had opponents in the military angered by deep personnel cuts in the armed forces under his reforms.

Russia media also say he had fallen out with his influential father-in-law Viktor Zubkov, a former prime minister and ally of Putin, after his marriage to Zubkov's daughter hit the rocks.

Defense experts said military reforms, due to take more than 100,000 officers out of service, would not be in danger under Shoigu and Gerasimov.

The reforms, two decades after the collapse of the Soviet Union and following two wars in Chechnya that highlighted the military's weaknesses, are intended to create a more modern, mobile and flexible army.

"Army modernization will continue by all means because this was not Serdyukov's reform, this was Putin's and (Prime Minister Dmitry) Medvedev's reform - with Serdyukov enforcing it," said Ruslan Pukhov, director of the Moscow-based Centre for Analysis of Strategies and Technologies.

Other analysts said Shoigu has turned to people he believed would be reliable in the battle against corruption, which many analysts says runs deep in the military establishment.

"The level of corruption in the Defense ministry was enormous. And if Shoigu can at least limit it, this would be an achievement in itself," said Valery Yevseyev, director of the Centre for Social and Political Studies, a think-tank.

(Additional reporting by Douglas Busvine and Alexei Anishchuk; Editing by Jon Boyle)