There had been question marks over whether Moscow should be invited to the high-powered forum in Brisbane with the brutal five-month conflict that has killed around 3,000 people still unresolved.
Opposition to Putin's attendance intensified after a Malaysia Airlines plane was shot down over eastern Ukraine in July, killing all 298 onboard including 38 Australian citizens or residents.
Kiev and the West have accused separatists of downing it with a surface-to-air missile supplied by Russia - a charge Moscow denies.
As the G20's rotating president, Australia has been canvassing the views of other member nations about what to do.
Despite Western concern about Moscow's territorial ambitions, Treasurer Joe Hockey said the consensus was that Russia should attend the leaders' summit to help address the geo-political tensions.
"If one party is to be excluded for various reasons then it requires the agreement of all parties to the G20," he said at a meeting of G20 finance ministers and central bank governors in the northern Australian city of Cairns.
"We've consulted with a number of countries and the emphatic view came back that of course we expect Russia to attend the G20. They are a member of the G20 and we expect that they would attend the G20 meetings."
A Russian delegation is in Cairns, led by deputy finance minister Sergei Storchak.
Hockey said several G20 nations had made clear that "the door should always remain open for communication in order to address some of the geo-political tensions involving Russia".
"So there was a view that the door should always remain open to keep the dialogue going because ultimately that will be the best way to alleviate some of the geo-political challenges that are faced by many countries by Russia's actions, and others' actions, over the last few months."
A fragile European-brokered ceasefire sealed on September 5 has overall dramatically scaled back the fighting across industrial eastern Ukraine.
But sometimes-deadly shelling and gunfire is reported almost daily around the flashpoint city of Donetsk.
Face-to-face talks aimed at finding a way to end the war began on Friday in the Belarussian capital Minsk, trying to build on the ragged ceasefire.
The two sides signed a memorandum early Saturday agreeing to stop fighting and create a 30-kilometre (19-mile) demilitarised zone in order to bring lasting peace to the east of the country.
