Members of his ruling Socialist Party say the move brings South America's top oil producer into line with international norms for policing the Web. But opposition politicians say it is aimed at stifling dissent.
It followed a more controversial vote by the National Assembly last week that will allow Chavez to bypass the next parliament and rule by decree for 18 months.
The former paratrooper turned populist leader says he needs the wide-ranging powers to deal with a national emergency caused by floods that have killed 40 people and driven nearly 140,000 more from their homes.
But the decision was denounced by furious opposition parties due to take 40 percent of seats in the Assembly beginning on January 5, as well as by the U.S. State Department, which accused Chavez of finding "creative ways" to justify autocratic powers.
The Internet bill approved on Monday prohibits online content attacking "good customs," disrespecting public officials or inciting violence against the president.
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