Tens of thousands of protesters flooded central La Paz and blocked routes to the city today to demand that Bolivia's natural gas riches be nationalised and its constitution rewritten.
But President Carlos Mesa, a political independent with few friends in Congress, vowed to stay in power to the end of his term despite a rising tide of protest.
The native Indian protesters marched single file through La Paz, where standoffs between them and police later turned ugly. Six people were injured by rubber bullets fired by police, activists said.
Instability returned to South America's poorest nation a week after Congress passed a law raising taxes and breaking existing contracts with foreign oil companies.
A Bolivian demonstrator is hit by a police officer during protests in La Paz
Companies decried the measure as too drastic while leftist Indian groups called it too weak.
"This march of some 40,000 people is for 'nationalization without compensation' and the constitutional assembly is a question of life or death for us because when Bolivia was founded, we Indians were not included in any way," said Roman Loayza, head of Bolivia's peasant confederation and a senator for the Movement Toward Socialism party.
Protesters damaged vehicles as they tried to reach the government palace and congressional building and police responded by shooting tear gas.
The conflict lasted about four hours. Central La Paz was also tied up by health sector workers demanding salary raises. Demonstrators in the militant city of El Alto, which overlooks La Paz, blocked highways connecting the capital to the rest of the country and the Peruvian and Chilean borders.
Activists also threatened to occupy Bolivia's international airport in El Alto, but an airport spokeswoman said American Airlines was the only one to suspend its flights.
Airport workers announced a 24-hour strike for today, which threatens to halt air traffic.
Indians represent a 61 per cent majority in Bolivia but have long been marginalised politically.