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Head of state Sauli Niinisto and Prime Minister Sanna Marin called on politicians to approve a membership bid within days so that Finland can join the alliance "without delay".
"Nato membership would strengthen Finland's security," they said in a historic joint statement issued early on Thursday, and "as a member of Nato, Finland would strengthen the entire defence alliance."
Moscow reacted by saying the expansion of the alliance was "definitely” a threat to its security.
Russia's Foreign Ministry said it would need to take "retaliatory steps, both of a military-technical and other nature, in order to stop threats to its national security arising".
"Helsinki must be aware of the responsibility and consequences of such a move," it said.
Kremlin spokesman Dmitry Peskov said: "The expansion of Nato and the approach of the alliance to our borders does not make the world and our continent more stable and secure.”
Nato leaders are expected to give swift approval to any membership bid. Secretary General Jens Stoltenberg said Finland would be "warmly welcomed" as the alliance's 31st member and that the accession process would be "smooth and swift".
But Russia denounced a move which would double the length of its border with Nato. A Foreign Ministry statement said Moscow would be "forced to take retaliatory steps, both of a military-technical and other nature, in order to stop threats to its national security arising" from Finland's accession.
Finland, which shares a 1,300-kilometre land border with Russia, has previously preferred to stay out of Nato and seek cordial relations with its large eastern neighbour after two 20th-century wars. Ms Marin said in January that it was "very unlikely" the country would seek Nato membership on her watch.
But the war unleashed by Russia in February has prompted a rethink from Finland and its neighbour Sweden, where politicians are also expected to decide soon on whether to join the alliance.
Finnish Foreign Minister Pekka Haavisto, speaking to European Union lawmakers on Thursday, said his country was concerned by Russia's unpredictable behaviour and its readiness to wage "high-risk operations" that could lead to many casualties.
Polls in both countries show growing support for joining Nato as countries on Europe's northern and eastern flank bolster their security to face up to a newly hostile Russia. Preparations are being made in Finland for people to shelter in bunkers in the event of a nuclear attack.
Finland's parliament, where more than two in three lawmakers support the application, is preparing to debate the issue on Monday.
Moscow's threats of retaliation had prompted warnings from security chiefs about potential Russian efforts to meddle in their political debates. But leading politicians including Mr Niinisto say Russia has only itself to blame for motivating nearby countries to join Nato.
"You caused this. Look at the mirror,” Mr Niinisto told Russia on Wednesday.
The Kremlin views Nato expansion as a prime security grievance and its demands to keep Ukraine out of the alliance were central to the stand-off that culminated in the invasion.
A Finnish security review last month said moving under the umbrella of Nato’s Article 5 guarantee — in which all allies promise to defend each other from attack — would be a more effective deterrent against Russian aggression.
The joint statement said Ms Marin and Mr Niinisto had sought to "give the discussion the space it required" by consulting with Nato, Sweden, partner countries and parliamentary groups.
“Now that the moment of decision-making is near, we state our equal views... Finland must apply for Nato membership without delay," they said. They added: "We hope that the national steps still needed to make this decision will be taken rapidly within the next few days.”
A membership application will have to be approved by all 30 existing allies, but Mr Stoltenberg and many member states including Britain and the US have expressed support for admitting Finland.
German Chancellor Olaf Scholz welcomed the announcement and said he had told Mr Niinisto in a phone call that Europe's biggest economy would support Finland's application.
Finland and Sweden already co-operate closely with Nato and took part in recent drills in Europe's high north called Cold Response 2022. Diplomats from the two countries have attended numerous Nato meetings since the war in Ukraine broke out.