The United States has rejected accusations by Venezuelan President Hugo Chavez that it was plotting a military occupation of the country with the Colombian government.

'Our focus in the region is on a positive agenda that features things like free trade and economic development, not on any kind of wild conspiracy theories,' State Department deputy spokesman Tom Casey said Tuesday.

Chavez Friday accused Bogota of preparing an attack on Venezuela at the behest of the United States, and said it would be impossible for the two countries to return to 'normal' relations as ties continue to deteriorate.

Colombia has also denied Chavez's allegations of a conspiracy, saying it was trying to resolve disputes with its neighbour through 'diplomatic channels'.