The measure also prohibits states and municipalities from collecting tariffs or tolls at transportation hubs or on highways, cutting off a key source of funding for local projects that could otherwise compete with federal handouts, Abelardo Daza, a Caracas-based economist,  said.

Soldiers were seen occupying major facilities under the legal reform approved by the pro-Chavez parliament, taking over maritime terminals in the opposition stronghold city of Maracaibo in the state of Zulia, the port of Guanta in Anzoategui and others in the states of Carabobo and Nueva Esparta.

Chavez announced the move last week and threatened to arrest opposition governors if they resisted.

Many opponents decried the order as unconstitutional and as an attempt to concentrate all power in Chavez's hands.

Budget cut

Also on Saturday, Chavez reduced the size of the 2009 budget by 6.7 per cent to $72bn, in what he said was part of a set of measures to offset lower oil revenue in the Opec nation.

Chavez also reduced Venezuela's budgeted oil price estimate to $40 per barrel from $60 and lowered the oil output estimate to 3.17m barrels a day from about 3.67m.

Mariana Sanchez, Al Jazeera's correspondent in the capital Caracas, said: "The president is explaining to the people that the world economic crisis has not affected Venezuela directly, but the slump in oil prices has.
 
"So he announced the 6.7 per cent reduction in the national budget and has asked for the co-operation of all state officials in the implementation of these measures."

Chavez promised on Saturday to send a revised budget to the legislature in coming days.

Venezuela depends on oil for 93 per cent of exports and nearly half its federal budget. Crude prices are now 65 per cent below their July 2008 peak.