Italy s Prime Minister Mario Draghi addresses a media conference during the G7 summit at Castle Elmau in Kruen, Germany, on Tuesday, June 28, 2022. AP
Indonesia holds the rotating presidency of the G20 this year and Western countries have pressured Widodo to exclude Russia's president from the summit, after announcing in April he had been invited.
"President Widodo rules it out," Draghi told reporters at the end of the two-day G7 summit in Germany, to which Widodo was invited as a guest. "He was categorical, he (Putin) will not come.
"What may happen is a remote participation, we'll see," Draghi added.
The Kremlin reacted swiftly, with advisor Yuri Ushakov saying: "Draghi does not decide this."
"We have received the invitation and we have responded positively," Ushakov said, according to Russia's Interfax news agency.
"He (Draghi) has surely forgotten that he is no longer the host" of the G20, as he was last year, Ushakov added.
On Monday, Ushakov said that Russia was interested in participating in the November 15-16 summit for which Putin had been invited to attend in person.
Indonesia, like most major emerging economies, has tried to maintain a neutral position and has called for a peaceful resolution to Russia's months-long offensive in Ukraine.
Widodo was due to visit Kyiv to meet Ukrainian President Volodymyr Zelensky, whom he has also invited to the G20 summit, before heading to Moscow to meet Putin.
He has said he will urge peace talks during both meetings.
Some Western leaders have said they would still attend the November gathering of the world's 20 richest nations even if Putin were to attend.
Germany's Chancellor Olaf Scholz indicated he was still open to taking part, while the head of the European Commission, Ursula von der Leyen, said she did not rule out sitting down with Putin.
It was "important to tell him to his face what we think of him", she said.
G20 nations make up about 80 percent of total world economic output, while the G7 contributes about 31 percent.
Putin joined last year's G20 summit in Rome last October via videoconference, due to the coronavirus crisis.