It is a balmy 33 degrees in Caracas but for many Venezuelans Christmas has come early.

Faced with an unexpectedly tight race for re-election, President Chávez has given government workers their seasonal bonus — worth about three months’ salary — now.

Mr Chávez has also given residents of the capital free rides on a new metro line and tickets to a rock concert headlined by the popular group Manu Chao.

The Opposition has cried foul, saying it is part of a bonanza designed to buy votes for the poll on December 3.

His main challenger, Manuel Rosales, is, however, planning a gigantic giveaway of his own. The governor of the western oil-rich state of Zulia is promising to hand out debit cards to more than two million poor Venezuelan households. They will have access to a bank account containing a fifth of the country’s oil revenues and allow households to withdraw around £250 a month.

“Who wants one of these?” shouted a warm-up singer at a Rosales campaign rally this week, holding aloft the black plastic card. “We do,” the crowd roared.

Mr Rosales is also promising to curb Venezuela’s soaring murder rate by giving people $2,400 for each firearm they hand in, and a new “crusade” to build 1.5 million new homes for the poor. Mr Chávez says he is planning to build entire new towns to house the poor.

The promises are part of the first genuinely competitive presidential race since 1998, when Mr Chávez first rose to power. Until recently most people assumed he would be easily re-elected.

During his eight years in power he has consolidated his grip on all branches of government and holds sway over the electoral commission.

Record oil prices have given him almost unlimited funds with which to keep supporters happy. And until recently, the Opposition has been fragmented and inept, tarred by a failed coup attempt in 2002.

In August, however, after threatening to boycott the elections, the opposition groups surprised everyone by coming together behind a single “Unity” candidate. While lacking the President’s charisma, Mr Rosales has proved a surprisingly adept campaigner, throwing himself into the task with gusto.

While Mr Chávez has travelled the globe denouncing the US in Syria, Iran, Russia, Belarus and Beijing, his opponent has been rolling up his sleeves, diving into crowds and kissing babies in Venezuela’s most impoverished neighbourhoods.

By challenging Mr Chávez on his own turf, he has started to close a 40-point gulf in the polls. Some recent surveys have shown the gap to have narrowed to single digits, unthinkable two months ago.

“When we started the campaign we looked like Don Quixote, dreaming of windmills,” Mr Rosales told a group of foreign journalists this week. “Today, Venezuela has woken up and people think there is a way out, an alternative.”

Mr Rosales has pounded away relentlessly at Mr Chávez’s perceived weaknesses, criticising the president’s generous aid for Cuba, Bolivia — even London. Under a deal with London’s Mayor, the city is set to get cheap Venezuelan fuel for its bus fleet in return for advice on street cleaning and policing. Ken Livingstone was due to sign the deal in Caracas this week but cancelled his trip after Mr Chávez claimed to be too busy to see him.

Polls show that his international largesse is unpopular even with his own supporters. His recent failure to secure a temporary seat on the UN Security Council was a further blow to his outsized international ambitions. “Although Chávez remains personally popular, there are a lot of soft spots in his regime,” said Michael Shifter, an analyst at the Inter-American Dialogue in Washington, DC. “Some of the overreaching we’ve seen, the international gallivanting, is not very popular at home. Crime and corruption are also ongoing concerns.”

Mr Chávez has steered clear of “bread and butter” issues, focusing instead on his “war” with the Bush Administration. He never names his electoral opponent and refuses to debate with him on television.

“In this election there are only two candidates,” he declares. “Hugo Chávez and George W. Bush”.

His campaign posters urge Venezuelans to “Vote against the Devil! Vote against the Empire!” Mr Chávez, a former paratroop commander, has told Venezuelans to be ready for a US invasion. He is raising an armed militia several hundred thousand-strong, ostensibly to resist such an event.

Opponents worry that its real purpose is to prevent a transfer of power should Mr Chávez lose the election.

Mr Chávez has also started running television advertisements declaring his “love” for Venezuelans and asking them to reciprocate on December 3.

The fear among the opposition is that Mr Chávez may use rather more than love as a tactic if he does not have a comfortable lead as the election draws closer.

LIVING IN VENEZUELA

In Venezuela £250 will buy: six months’ rent; or a one-way flight to Heathrow; or 200 pints of lager; or 14,000 litres of petrol

Times Recommends

• The Japanese Prime Minister is doomed: or is he?
• Brighton company 'involved in cyber attack'
• The art of survival: it's all in the mind