"I believe that the time has come for the FARC to release all the people it has up in the mountains unconditionally. It would be a great humanitarian gesture," Chavez said on his weekly TV and radio show Sunday.
"Guerrilla wars have become history in Latin America," he said.
Critics often have accused the leftist Chavez of backing the Revolutionary Armed Forces of Colombia, but on Sunday he bluntly called their very existence into question.
"This far along in Latin America, an armed guerrilla movement is out of step, and that has to be said to the FARC," he said.
Chavez warned that the rebel insurgency was being used by the United States to back allegations of terrorism in Latin America.
"The FARC should know this: you have become an excuse, a justification for the Empire to threaten all of us," Chavez charged, referring to the United States. "You are the perfect excuse."
The Colombian government, which has accused Chavez of funding and giving safe haven to the rebel force, welcomed his "surprising" words.
"He is a great defender and ally of the guerrillas, so it is so surprising," Justice and Interior Minister Carlos Holguin told Caracol television in Bogota. "But it's great, and I hope FARC hears him."
Foreign Minister Fernando Araujo said: "This proposal coincides with what Colombians have always said, that kidnapping has no place in our society ... and we demand FARC immediately free all its captives."
It was the first time Chavez publicly addressed the new leader of the FARC, Alfonso Cano, named to the post in May.
"I say to Cano: let's go, release those people," Chavez said, adding that then peace talks could begin, with a group of countries supporting the process.
Cano took the rebels' leadership after the FARC confirmed that its longtime leader Manuel Marulanda had died in late March.
"The situation Latin America finds itself in, just like the situation the United States finds itself in, would appear favourable for a peace process," Chavez ventured.
Chavez led mediation efforts from September to November 2007 for the exchange of some 40 hostages held by the FARC for some 500 rebels jailed by the Bogota government.
The hostages include Franco-Colombian politician Ingrid Betancourt and three US nationals.
Early this year, the FARC released six hostages to Chavez, but the Venezuelan leader said he lost contact with the rebels after Colombia attacked a guerrilla camp in Ecuador in March, killing the group's second-in-command.
But a Colombian senator who was also a mediator with the FARC, Piedad Cordoba, said Sunday she believed a release of hostages "is near."
Cordoba said that during the European-Latin American summit in Lima on May 17 she met with leaders of Argentina, Cristina Kirchner; Ecuador, Rafael Correa; Bolivia, Evo Morales; Honduras, Manuel Zelaya; and Paraguay's president elect Fernando Lugo.
She told Radio Caracol she spoke two weeks ago with Chavez on the issue and also had met with aides to French Prime Minister Francois Fillon.
"All of this shows how interested Latin America is" in the hostages, Cordoba maintained. "I think we are very close to that release process."
Meanwhile, two civilian leaders the Colombian government has authorized to try to win the hostages' release said communication channels with the rebels had been reopened.
"I can say with certainty that everything is going well, and that there already are some communication channels," one of the two, Carlos Lozano, director of the Communist weekly Voz, told Radio Caracol.
Colombian President Alvaro Uribe has relentlessly pursued the rebels since his election in 2002 and has held no direct negotiations with them.
Under Uribe's military onslaught, FARC forces have been almost halved to 8,000, according to government estimates.
The FARC has lost several top leaders, including Marulanda, who according to the rebels died of a heart attack on March 26, and second in command Raul Reyes, killed in the March 1 attack on a rebel camp.
The FARC is holding some 750 hostages, including 39 high-profile hostages whom they want to swap for some 500 of their imprisoned comrades.
© 2008 Agence France Presse