UPDATE 1-U.S. and Venezuela to restore expelled ambassadors

* Venezuela and the United States to improve ties

* Chavez criticizes U.S. empire but warms to Obama

* Venezuela envoy to arrive in Washington this week (Updates throughout)

By Enrique Andres Pretel

MARACAY, Venezuela, June 24 (Reuters) - The United States and Venezuela will soon reinstate ambassadors expelled in a diplomatic spat last year, a sign of warmer relations between President Hugo Chavez and what he calls the U.S. "empire."

Leftist Chavez has toned down his strident criticism of U.S. foreign policy since Barack Obama took office in January, partly because the U.S. president is popular in Latin America in contrast to his predecessor George W. Bush.

Venezuela is one of the United States' top crude oil suppliers.

Obama has promised to seek to engage with countries Washington views as problematic and Chavez and U.S. Secretary of State Hilary Clinton agreed at a summit in April to work toward reinstating the diplomats.

At the same summit Obama shook hands with the socialist Venezuelan leader.