"This victory saved the revolution," said Gonzalo Mosqueda, a 60-year-old shopkeeper, sipping rum from a plastic cup outside the palace.
"Without it everything would be at risk - all the social programs, and everything he [Chavez] has done for the poor," he told AP.
More than 11 million voters out of almost 17 million who were eligible took part in Sunday's referendum, said the head of the electoral body, Tibisay Lucena.
Election observers, who included representatives from Latin American nations, European Parliament deputies and European academics, said the ballot had been free and fair.
Opposition figures said they would not contest the result but they said victory had been achieved thanks to huge government funding and blanket state television coverage.
Opposition leader Leopoldo Lopez told the BBC's Newshour programme on Sunday that the campaign had been heavily weighted towards Mr Chavez.
"In 10 years we have had 15 elections, 15, and this has been the most unequal, the most abusive campaign of all.
"So that's why you are seeing more propaganda, more campaigning, more advertisement for the 'yes' vote."
Under existing constitutional rules, the president was limited to two six-year terms in office, which meant that Mr Chavez would have had to leave the presidency in three years' time.
CHAVEZ DECADE: KEY DATES
Feb 1999: Takes office after winning 1998 election
July: Re-elected under new constitution for a six-year term
April 2002: Abortive coup. Chavez returns to power after two days
August 2004: Wins recall referendum on whether he should serve out rest of his term
Dec 2006: Wins another six-year term with 63%
Dec 2007: Loses constitutional referendum which included proposal to allow the president to run indefinitely for office
Feb 2009: Wins referendum that lifts term limits on elected officials
A proposal to end presidential term limits was one of a package of 69 constitutional changes narrowly rejected in a referendum in late 2007.
Victory this time round was by a wider margin than many analysts and opinion polls had predicted.
BBC Latin America analyst James Painter says it seems President Chavez managed to persuade more of his supporters to vote, as turnout was considerably higher than in 2007.
One factor was probably the change in the wording of the question, so that this time voters decided on whether term limits would be lifted for all officials not just the president.
President Chavez now faces the daunting task of grappling with the global economic crisis in a country dependent on oil exports, our correspondent says.
Venezuela has the highest inflation in Latin America, running at just under 30% a year.
There are also serious domestic problems such as violent crime that Mr Chavez will need to tackle in the next four years if he is to repeat his success in the presidential elections of 2012, our correspondent adds.
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