The move shields Lula from possible prosecution by a federal judge investigating a massive corruption scandal named Operation Car Wash.

But Ms Rousseff said that was not the motivation for the appointment.

“Lula’s arrival in my government strengthens it and there are people who don’t want it to be stronger.”

Under Brazilian law, cabinet members can only be tried by the Supreme Court.

Lula was questioned two weeks ago over allegations of money laundering connected to Operation Car Wash.

He says the allegations are aimed at preventing him from running for president again in 2018.

He is a “skilful political negotiator” and experienced leader who will help kick off economic recovery, said Ms Rousseff.

During his time in office, the Brazilian economy experienced unprecedented economic growth and wealth redistribution.

“I believe [former] President Lula, who was in charge of the country for eight years, cannot have his reputation destroyed in this manner,” added Ms Rousseff.

Hours after the announcement, protesters gathered outside the Presidential Palace in Brasilia and in at least three other cities.

In Congress, opposition politicians gathered around a microphone during a chaotic session and chanted “resignation”.

Fight against impeachment

Lula flew to the capital, Brasilia, on Tuesday for talks with President Rousseff. After a four-hour meeting, they agreed to reconvene on Wednesday.

Lawmaker Jose Guimaraes of the governing Workers’ Party, to which both Lula and President Rousseff belong, tweeted (in Portuguese) that current chief of staff Jaques Wagner had “shown greatness and selflessness on the day of his birthday” and ceded his post to Lula.

The former leader’s appointment was confirmed later in a statement issued by Ms Rousseff.

Lula and other ministers appointed on Wednesday are expected to be sworn in at 10:00 local time (13:00 GMT) on Thursday.

As chief of staff, Lula is expected to lead the fight against moves in Congress to impeach President Rousseff over allegations she manipulated Brazil’s account books to hide a growing deficit.

Analysts say President Rousseff is hoping that Lula will use his political nous and influence with members of Congress to block impeachment proceedings.

The two politicians have been close for decades. Lula was Ms Rousseff’s political mentor and she is his hand-picked successor.

On 4 March, Lula was briefly detained and questioned over allegations of money laundering connected to Operation Car Wash, a massive investigation into corruption at the state oil giant, Petrobras.

Prosecutors have since filed fraud and money laundering charges against him. However, the charges have yet to be accepted by a judge.

The case has been transferred to federal judge Sergio Moro, who is in charge of Operation Car Wash.

But if Lula is confirmed as a cabinet member, Judge Moro will not be able to investigate or try him.

Lula has consistently denied any wrongdoing and alleges the allegations are politically motivated. (BBC)

•Photo shows Brazil’s former President, Luiz Inacio Lula da Silva.