Local newspapers report a heavy military presence on standby

The demonstrators are protesting against government plans to export national resources, including gas, to Mexico and the US arguing they should be used to supply nationals first.

The protestors say President Gonzalo Sanchez de Lozada has been unable to change the country's status as South America's poorest nation.

Last week four demonstrators were killed as troops and police battled to free more than 800 tourists they were holding hostage near Lake Titicaca.

The latest road blocks have cut off the village in Luquisani - 200 kilometres (125 miles) north-east of the administrative capital, La Paz.

Negotiators say they are trying to bring the current stand-off to a peaceful end.

"What we want to do is to find a way out that is not violent like on Saturday," said Sacha Llorenti, vice president of Bolivia's Human Rights Assembly.

Intervention

Bolivian Interior Minister Jose Luis Harb has pledged to wait the outcome of the negotiations deciding whether to use "appropriate measures."

Many of the demonstrators are opposed to the US-backed programme to eradicate coca crops, the raw material used to make cocaine.

They are also against plans to export natural gas reserves to America and Mexico.

La Razon newspaper reports the peasants have control over roads linking La Paz with Achacachi and Copacabana and are looking to take control of the southern Altiplano's highways.

It said hundreds of troops are patrolling the area.

Around two-thirds of Bolivia's 8.3 million mostly indigenous Aymara Indian population live in poverty.

Opposition to government policies in Bolivia this year have caused a raft of fatalities.