The 58-year-old socialist leader has not been seen in public nor heard from in more than three weeks. Officials say he is in delicate condition after his fourth operation in just 18 months for an undisclosed form of cancer in his pelvic area.
"Comandante Chavez has faced complications as a result of a severe lung infection," Information Minister Ernesto Villegas said in the latest official update on the president's condition.
"This infection has caused a breathing insufficiency that requires Comandante Chavez to comply strictly with medical treatment," the communique added, giving no further details.
Vice President Nicolas Maduro had earlier returned to Venezuela on Thursday after visiting Chavez in hospital as rumors swirled that the president could be close to death.
Flanked by senior government figures including Diosdado Cabello, the head of the National Assembly, Maduro toured a coffee production plant in Caracas - the type of visit that the president made frequently before he fell ill.
"He is conscious of the battle that he's in, and has the same fighting spirit as always, with the same strength and energy as always, with his confidence and security," Maduro said. "We're going to be alongside him with the same strength and the same energy."
Maduro said Cabello, Oil Minister Rafael Ramirez and Chavez's elder brother Adan, among others, had all been with the president in the Havana hospital.
Venezuelan bonds rallied to five-year highs earlier on Thursday on rumors that Chavez's health had taken a turn for the worse. Foreign investors generally hope for a more business-friendly government in Venezuela, and its assets have rallied in recent months on news of his illness.
In scenes that recalled Chavez's hours-long televised visits to building sites, hospitals and oil refineries, Maduro told workers at the nationalized Fama de America factory that there was no "transition" taking place in the country.
"The only transition in Venezuela is the transition to socialism," he said in comments carried live by state television.
"It began six years ago, ordered by Comandante Hugo Chavez as chief and president, elected, re-elected and ratified, much as it pains the bourgeois hucksters and the right, who have done so much damage to our fatherland."
Chavez's abrupt exit from the political scene would be a huge shock for the South American OPEC nation. His oil-financed socialism has made him a hero to the poor majority but critics call him a dictator.
His condition is being watched closely by Latin American allies that have benefited from his help, as well as investors attracted by Venezuela's lucrative and widely traded debt.
'MAKE NO MISTAKE'
Chavez is still set to be sworn in on January 10, as spelled out in the constitution. If he were to die or had to step aside, new elections would be held within 30 days, with Maduro running as the ruling Socialist Party (PSUV) candidate.
While the constitution gives January 10 as the start of a new presidential term, it does not explicitly state what happens if a president-elect cannot take office on that date.
Top PSUV officials have suggested that Chavez's inauguration could be postponed - while the opposition says any delay would be just the latest sign the former soldier is not fit to govern.
Cabello said the "Chavismo" movement was in pain but remained resolute, and he issued a warning to the opposition: "Make no mistake about these people or this revolution. It is going to cost you very, but very, dearly," he said.
On Saturday, Cabello will likely be re-elected as head of the Chavista-dominated National Assembly, a key post that could see him assume Chavez's role temporarily while new elections are called should the president have to step down.
In the past Cabello has been considered as a rival of Maduro, but the pair have been at pains to deny that. Their appearance side-by-side at the coffee factory on Thursday looked to be the latest effort to project a unified front.
Last year, Chavez staged what appeared to be remarkable comeback from the disease to win re-election to a new six-year term in October despite being weakened by radiation therapy. But he returned to Cuba for more treatment within weeks of his win.
Officials have said he suffered unexpected bleeding and then a respiratory infection after a six-hour operation on December 11. That respiratory infection caused further complications, they have said, without giving more details.
The head of the opposition's Democratic Unity coalition, Ramon Aveledo, has accused the authorities of breaking a pledge to keep Venezuelans informed about Chavez's health.
And one opposition leader suggested on Thursday that legislators should form an official commission to visit Cuba and assess the president's condition for themselves.
Maduro hit back in his televised comments, saying the public had been provided with updates almost every day, and he accused Aveledo of orchestrating a campaign of misinformation.
"We have no doubt Mr. Aveledo is behind the campaign of sick rumors that began on Twitter and Facebook," Maduro said.