Mr Chavez said his country, the world's fifth largest oil producer, was meeting the "call of conscience" by supplying cheap oil at a time of rising prices.

The agreement is part of a regional Petrocaribe initiative - proposed by Mr Chavez - to which most of the Caribbean countries have signed up.

Jamaica is the first to formalise its participation in the project.

Venezuela has been discussing similar deals with many countries in Latin America and the Caribbean in recent months.

'Stronger ties'

Under the agreement, Venezuela will provide oil at a discounted rate of $40 (£22) a barrel, compared to more than $60 (£33) on the world market, Jamaica's Prime Minister PJ Patterson said.

The deal will initially involve about 22,000 barrels a day, for which Jamaica will be able to pay Venezuela in goods and services as well as through low interest loans, he added.

The prime minister said: "Much has been accomplished by strengthening the relationship between Venezuela and Jamaica."

Mr Chavez responded: "Don't thank us. It is the call of conscience."

His visit to Jamaica's resort city of Montego Bay followed a trip to Cuba, during which he and Cuban leader Fidel Castro reaffirmed their countries' joint commitment to socialism.

Diplomatic influence

The Jamaica agreement represents only a tiny proportion of the 3.1 million barrels produced by Venezuela each day.

The Petrocaribe initiative to bring cheaper oil to the region was signed at a regional summit in the Venezuelan city Puerto La Cruz in June.

Leaders from Caribbean nations joined the venture, with only two countries, Barbados and Trinidad and Tobago, declining to sign the deal.

Critics have said Mr Chavez is using Venezuela's oil to secure diplomatic influence in the Caribbean.

Venezuela is a leading oil supplier to the US, but Mr Chavez is seeking to develop diversified energy ties with the Caribbean, Latin America and Asia.