President Hugo Chavez is making a complete recovery from surgery for a suspected recurrence of cancer, his government said on Wednesday, urging Venezuelans to ignore Rumours that his condition was worse.

He is in a full process of recovery and he bade farewell saying 'we will live, we will overcome', Vice President Elias Jaua told state television after a phone call with Chavez.

Despite the upbeat official assessment of Chavez's latest operation in Cuba, some sources including a prominent pro-opposition Venezuelan journalist suggest he may face a life-threatening spread of the disease discovered last year.

That would throw into doubt the 57-year-old Chavez's campaign for re-election in October and his capacity to rule the South American OPEC member afterwards should he win.

It would also reverberate around a region where Cuba and other leftist governments count on his oil-financed largesse.

The government blames Venezuela's ultra-right for fomenting speculation that Chavez's health is deteriorating.

Our people should not pay attention to these Rumours. We are going through a very emotional time, Isis Ochoa, the minister for social protection, told state TV.

People should keep trusting in their leaders.

Having exuded strength since storming to power as an election outsider in 1998, Chavez's public image and personal ebullience suffered a big blow last year when doctors discovered a cancerous tumour in his pelvis.

MEDIA HATE FIGURES

Although he said he was fully recovered toward the end of 2011, the president returned to Cuba for new surgery last weekend on a probably malignant lesion in the same area.

The government said the lesion was completely removed and that he is recovering well in Havana, with test results due soon on the extracted tissue to determine the full picture.

There has been no word on when Chavez will return, prompting opposition calls for a replacement to be named.

Nelson Bocaranda, an anti-Chavez Venezuelan journalist who broke the news of his return to Cuba, and Merval Pereira, a well-known commentator for Brazil's O Globo network, have been quoting medical sources to suggest the Venezuelan leader's situation is much more serious than the official version.

The pair have been heavily criticized by Chavez allies.

In an increasingly vitriolic atmosphere, state TV was crammed with mockery of foreign and opposition media, while anti-Chavez activists have sarcastically dubbed Bocaranda the country's only reliable information minister.

Experts say the pathology results from Chavez's operation on Monday may take up to five days, while a normal recuperation period from that type of surgery would be a week to 10 days.

Former Cuban President Fidel Castro has long been Chavez's mentor, and the Venezuelan leader prefers receiving treatment in Havana where there is high security and a lower chance of his medical details being leaked on the tightly controlled island.

In his latest online posting, Bocaranda said on Wednesday there was an atmosphere of great paranoia at the Cimeq hospital in Havana where Chavez was presumably being treated.

A Brazilian doctor helping assess Chavez had concluded the use of steroids to give him strength since last year's operation had hastened the recurrence of a new tumour, he said.

If the decision is to give him more chemotherapy from April, as we said last week, the use of steroids will be forbidden, Bocaranda added on his closely watched www.runrun.es site.

That is a big worry for the patient because his physical deterioration, with such a strong cocktail of chemicals, would become evident very quickly.

VOTE LOOMS

Cuba has a lot at stake in Chavez's future.

It receives about 100,000 barrels per day of cheap oil from Caracas in return for supplying doctors, nurses, teachers and others to work in Venezuelan social projects.

Chavez's rival for the October 7 poll is Henrique Capriles, a 39-year-old state governor who hopes to woo former Chavez voters with a promise of a Brazilian-style modern left government.

He repeatedly wishes Chavez a speedy recovery so he can see the changes coming to Venezuela.

Before the announcement that he would need more surgery, opinion polls showed Venezuelans broadly split - a third pro-Chavez, a third pro-opposition and a third undecided.

But the polls indicate Chavez has the edge in voter enthusiasm due to his popularity among Venezuela's poor and a big increase in welfare spending for the most needy.

While the president may get a sympathy bump in opinion polls from his latest health setback, analysts say perceptions of weakness - particularly in contrast with Capriles' youthful image - could offset that.

The OPEC nation's widely traded bonds have jumped on investor perceptions of a more market-friendly opposition's enhanced chance of winning the presidential poll in October.

Chavez has avoided grooming a successor, so Rumours abound as to who could take over if he were incapacitated.

Two heavyweight allies, vice president Jaua and Congress head Diosdado Cabello, are widely rumoured to be at odds. Yet they made a public show of friendship in parliament on Tuesday, smiling and pledging unity.

Neither man, nor any other of Chavez's closest allies, have his man-of-the-people charisma or the political talents that have enabled him to thwart the opposition for 13 years.

(Additional reporting by Daniel Wallis in Caracas and Nelson Acosta in Havana. Editing by Christopher Wilson)