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