Venezuela "earned their spot honestly" on the list of countries whose cooperation is unsatisfactory, said US State Department spokesman Sean McCormack.

McCormack cited US concerns over Caracas' ties with Iran and Cuba, which Washington considers state sponsors of terrorism, and their "intelligence-sharing relationship, which has made it very difficult for the United States to work on anti-terrorism efforts with them (Venezuela)."

"If you have a reasonable or rational expectation that somehow information that you share with them might make its way to just the groups that you're trying to combat, that's certainly negative," he said.

The US sanctions ban arm sales and technology transfers to Venezuela, another State Department spokesman said.

"We are certifying to Congress that Venezuela is not fully cooperating with US anti-terrorism efforts," Eric Watnik, a spokesman for the State Department's Bureau of Western Hemisphere Affairs, told AFP.

"US sales and licenses for the export of defense articles and services to Venezuela, including the retransfer of defense articles, will not be permitted," he said.

Chavez immediately slammed the US action as "a demonstration of the empire's policy against Earth's smaller countries."

However, Chavez, who spoke during a short visit in London, said he would not suspend oil exports to the United States.

"I am conscious of my responsibilities," the socialist leader said, adding that such a suspension would be "madness" because it would raise world oil prices "above 100 dollars a barrel."

The administration of President George W. Bush has had thorny relations with Chavez, whose country is the fourth-largest supplier of oil to the United States, at 1.5 million barrels per day.

Washington has charged Chavez's government with restricting the freedom of the press and harassing the opposition, while Chavez frequently criticizes Bush for the Iraq war and has openly called the US leader a "coward" and a "murderer".

The sanctions announced Monday ratcheted up US moves to isolate Venezuela in the military sphere.

In January, Washington had intervened to prohibit the sale of US arms or military technology to Venezuela by third countries, such as Spain and Brazil.

The US blocked a sale by the Spanish government of 12 military aircraft with US components to the South American country, accusing Chavez's government of promoting "regional instability".

At the same time, it warned Brazil of the danger of selling military materiel to Venezuela. The Brazilian government was considering selling to Caracas 36 patrol aircraft which require US technology.

By contrast, Washington has been unable to block a sale by Russia of 100,000 Kalashnikov rifles. However, the Russian-made guns have not yet been delivered.

In Caracas, Venezuelan Foreign Minister Ali Rodriguez said the US sanctions were a "cynical" move and warned that American companies could be in breach of contract with Venezuela if they abide by the order.

"There are signed contracts, there is a legal, contractual obligation with American companies. There are helicopters being repaired that are used for (anti-drug trafficking) operations," Rodriguez said.

In recent months the United States has grown increasingly vocal in its opposition to Chavez and his government. Secretary of State Condoleezza Rice has cited Venezuela as the region's biggest problem and has called on US allies to mount a united front in dealing with it.