Bolivian President Gonzalo Sanchez de Lozada appears to have ceded to some opposition demands amid massive protests by an enraged Indian majority.
In what could be a last attempt to avoid the danger of a bloodbath, the president stood side by side late on Wednesday with his coalition partners, saying "Bolivian democracy was never in such grave danger" and ceding to some opposition calls to reform his free market economic policies.
"For the first time in this crisis the president has taken the political initiative," said one political analyst. "It's a move that could prove very difficult for the opposition to respond to."
Mr Sanchez de Lozada promised a referendum on a controversial gas project, a reform of a free market energy law and constitutional reforms. The referendum and criticisms of foreign investment in the energy sector have been some of the opposition's rallying cries.
Protests against the president, a businessman who speaks Spanish with a US accent and is one of Bolivia's richest men, have widened over the last month to cover most regions of South America's poorest country. An estimated 55 people have been killed during the protests.
With the capital besieged by barricades and basic foods such as bread and eggs in scarce supply, the president's proposal may find support among some sectors of a population who face increasing difficulty to feed their families.
But other Bolivians are furious at the deaths of many Indian miners and farmers shot by troops and police
These Bolivians, many living on less than $2 a day, say the government and the Indian majority are so far apart that only Mr Sanchez de Lozada's resignation will end the crisis.