"The deep-seated culture of tolerance or worse for doping that got RusAF suspended in the first place seems not to have changed materially," said Rune Andersen, head of the IAAF's Russia task force.
There were still no strong anti-doping infrastructure in Russia and doping tests were still being hampered, Anderson added.
The decision not to reinstate the Russian association means Russian athletes remain ineligible to compete in international competitions including the European Championships and Rio Games in August.
A special IAAF body will consider those tested outside Russia and can prove they are not tainted by the Russian system to apply for permission to compete as neutral athletes.
"There won't be many that would manage to get through the crack in that door," Andersen cautioned.
In addition, any individual athlete who has made an extraordinary contribution to the fight against doping should be able to apply for permission to compete.
"In particular, Yuliya Stepanova's case should be considered favourably," an IAAF statement said.
It was the middle-distance runner's allegations of systematic doping made in a documentary in December 2014 which led to the suspension of Russian athletics.
"The first step that needs be taken by Russia is to acknowledge there is a problem at all levels of government and sports and then we can move forward," Andersen said.
The IAAF decision follows a warning issued by Australia's newly crowned Olympic champion Jared Tallent that the Rio Games would be tarnished if Russian athletes were allowed to compete.
Tallent has finally been presented with the Olympic gold medal from the London Games, where he crossed the line in the men's 50km walk behind Russian drug cheat Sergey Kirdyapkin.
"I hope they (the IAAF) make the right decision," he said on Friday (AEST).
"I believe if the Russian track and field team is there, it will hurt the credibility of the Games.
"I would be very, very angry and more athletes would be robbed of medals again."
Australian Olympic boss John Coates echoed his comments, saying he believed Russia's athletes would remain banned and slamming its anti-doping agency and athletics body as having been "rotten to the core".
Russian President Vladimir Putin denied any government involvement in a statement prior to the IAAF's announcement.
"This is for certain and I am stressing it - there had never been and will never be in Russia any government's support for sports violations, particularly the sphere of anti-doping," he said in St Petersburg.
Russia would come up "with a response" to this expected IAAF decision, Sports Minister Vitaly Mutko was quoted as saying.
Russia's two-time Olympic pole vault champion Yelena Isinbayeva said she would take legal action over an alleged breach of human rights if not permitted to take part in the Olympics.
Any athlete has the right to appeal IAAF's decision at the Court of Arbitration for Sport in Lausanne, Switzerland.
IAAF had decided to consider exemptions rather than issue a complete ban because this would make it easier to argue in court that the ruling was not excessive, Andersen explained.
The International Olympic Committee (IOC) executive board will meanwhile on Saturday discuss what steps to take next.
- AAP
