Mr Schroeder (R) had a close personal relationship with Mr Putin

Mr Schroeder - who as chancellor negotiated the deal - will head the shareholders' committee, a position roughly comparable to board chairman.

Work began on the pipeline on Friday. The project has caused concern in the Baltic countries, Poland and Ukraine.

It will send Russian gas to Germany and other West European nations by 2010.

Russia supplies a quarter of the region's gas needs.

With limited natural resources of its own, Germany's dependency is even greater and Europe's biggest economy relies on Russia for a third of all its oil and gas imports.

'Code of conduct'

The $5bn (£2.7bn) deal was struck between the two countries' leaders last September, just before Mr Schroeder lost power.

It stinks Reinhard Buetikofer Greens co-chairman

But the opposition Greens and Liberals (FDP) condemned Mr Schroeder's acceptance of the post, saying it would lead to the suspicion that the former chancellor was unable to distinguish between public and private affairs.

"It stinks," said Greens co-chairman Reinhard Buetikofer.

"It is to be hoped that Schroeder would do the job without payment. Otherwise there would be the suspicion that Russian President Putin created a job to reward Schroeder," the FDP's Rainer Bruederle told the International Herald Tribune.

The party called for a code of conduct for former members of government.

Current Chancellor Angela Merkel strongly supports the project, but has been critical of Mr Schroeder's close relationship with Mr Putin.

The 1,200km pipeline will run from the northern Russian town of Babayevo to the coast at Vyborg before going under the Baltic Sea to the town of Greifswald in north-eastern Germany.

It is set to bypass Poland and Ukraine, prompting concern from both countries that they will be cut off from Russian gas supplies.