A process for preparation of an improved Li-promoted MgO catalyst useful for oxidative coupling of methane to ethane and ethylene, in presence of free oxygen, which comprises (i) mixing thoroughly powdered magnesium acetate and lithium acetate, which are catalyst precursors, with Li/Mg mole ratio of 0.01-1.0 with or without water, the H.sub.2 O/magnesium acetate weight ratio being in the range of 0-5.0, (ii) heating the mixture, while stirring, to dryness at a temperature of about 60.degree.-300.degree.C., (iii) powdering and calcining the dried mixture at a temperature of about 500.degree.-1000.degree.C. in presence of air, O.sub.2, CO.sub.2, inert gas (like N.sub.2, He, Ar, etc.) or their mixture or under vacuum for about 1-100 h and (iv) making by known methods the pellets, extrudates or granules of the catalyst of required size.