Venezuela is to become a permanent member of the South American trade bloc Mercosur.
Mr Chavez describes Venezuela joining Mercosur as an 'historic' step
The country's addition would be formalised in December, said an official from Uruguay, the current president of the bloc.
The Venezuelan government welcomed the announcement, saying its membership would strengthen Mercosur.
Venezuela is the world's fifth largest oil producer, and soaring crude prices have helped boost its economy.
The country - which also has the region's largest natural gas reserves - has sought to deepen energy ties with other South American nations.
"This is something that is historic for us. We are going to work very hard," President Hugo Chavez told reporters during the summit of Iberoamerican leaders in Spain.
Mercosur was founded by Argentina, Brazil, Uruguay and Paraguay in the 1990's.
Venezuela - along with Peru, Bolivia and Chile - currently holds associate member status.
This blocks it from participating in many important Mercosur tariff agreements.
As a full member, Venezuela will adopt Mercosur's common external tariff.
The Brazilian government said that it did not expect Venezuela's inclusion as a full member of Mercosur to affect long-running trade talks between the South American bloc and the European Union.
In September, the EU and the Mercosur agreed to extend negotiations into 2006 after failing to bridge deep divisions over agricultural subsidies.