Bolivian President Gonzalo Sanchez de Lozada is under increasing pressure after he failed to appease street protests and his vice-president further distanced himself from the government.
Poor indigenous Indians, who blame US-backed president Sanchez de Lozada for the deaths of an estimated 74 people in a month of protests, took to the streets to reject the president's attempt to win over foes by watering down his hated free-market policies.
In the the biggest march since the protests began, tens of thousands of demonstrators marched on La Paz, detonating dynamite sticks. Police fired tear gas and rubber bullets on some protesters who tried to approach the government palace.
Mr Sanchez de Lozada, a 73-year-old US-educated businessman and one of the wealthiest people in the country, is disliked by millions of Bolivians who see him as being out of touch with the needs of South America's poorest country.
A US-led effort to eradicate coca plantations and an unpopular plan to export natural gas sparked the unrest in the landlocked nation of eight million people.
Vice-President Carlos Mesa appeared on television yesterday to effectively stamp himself a political independent by saying he did not want to be part of "the polarisation of Bolivian society."
The respected journalist, who does not belong to a major political party, won cautious support of some Indian leaders as a replacement for Mr Sanchez de Lozada, although some Bolivians say he does not have experience or political clout to run the country.