THE diplomatic face-off between Russia and the United States took another twist last night as an electrical company in the US state of Vermont claimed that it had found malware code allegedly used by Russian hackers on one of its company laptops.

The Burlington Electric Department said it had taken "immediate action to isolate" the computer, which was not connected to the electrical grid. The government had alerted them to the "Grizzly Steppe" code on Thursday, the same day the US expelled 35 Russian diplomats over alleged Russian cyber interference in November's presidential election.

US officials believe Russia was behind the hacking of Ukraine's electrical grid in December 2015, which plunged parts of the country into darkness and left about 225,000 people without power.

On Friday, US President-elect Donald Trump praised Russian President Vladimir Putin for not expelling American diplomats in a tit-for-tat response.

The decision came as a surprise, as tit-for-tat expulsions are common diplomatic practice and Russian foreign minister Sergey Lavrov had suggested hours before Putin's announcement that Moscow would oust 31 American diplomats.

However Putin contradicted him saying, "The Russian diplomats returning home will spend the new year holidays with their relatives and dear ones. We will not create problems for US diplomats. We will not expel anybody."

He added: "Moreover, I am inviting all children of US diplomats accredited in Russia to the new year and Christmas parties at the Kremlin."

Dmitry Trenin, director of the Carnegie Moscow Centre, said on Twitter: "Putin's asymmetric response to Obama's new sanctions is an investment in the incoming Trump presidency. A different kind of tit-for-tat: even as Obama seeks to constrain Trump in his Russia policy, Putin counters that step with a show of magnanimity."

The diplomatic confrontation between Washington and Moscow, which had been festering even before Trump won the November 8 presidential election, puts pressure on the billionaire businessman not to let Russia off the hook after he takes office on January 20.

Russia's government had threatened retaliation and it continues to deny US accusations that it hacked and stole emails to try to help Trump win.

The president-elect praised Putin for holding off on retaliation, tweeting: "Great move on delay." He added: "I always knew he was very smart!"

Trump has been slow to criticise Putin and has questioned US intelligence linking Russia to the hacking.

He is planning to meet US intelligence officials next week, but has said it is time for the country to move on.

On Thursday Obama ordered sanctions against the GRU and FSB, the Russian intelligence agencies the US said were involved in the hacking attacks.

In an elaborately co-ordinated response by at least five federal agencies, the Obama administration also sought to expose Russia's cyber tactics with a detailed technical report and hinted it might still launch a covert counter attack. "All Americans should be alarmed by Russia's actions," said Obama.

Yet the sanctions could easily be pulled back by Trump, who has insisted that Obama and Democrats are merely attempting to de-legitimise his election.

The President-elect also had an unusual New Year message for his Twitter followers. He wished a "Happy New Year to all, including to my many enemies and those who have fought me and lost so badly".

Trump added: "they just don't know what to do", ending his message with the word, "Love!"