La Paz - The government and opposition agreed to hold a nationwide referendum Sunday on the new draft constitution proposed by the president, after he agreed to term limits, a senior official said.

Rural Development Minister Carlos Romero said on Monday the agreement moves up the next general election by one year, to January 2009, which President Evo Morales would contest for his second and final term.

"We have worked day and night to reach an accord," Romero said. "President Morales even had to renounce the possibility of a second re-election after the constitution is approved."

The draft charter enshrines many of the president's reforms that favour the indigenous majority and allow state control over key sectors of the economy, which have angered wealthy mestizos to the point of violent clashes last month that took 19 lives.

Morales, a former coca farmer who became the country's first ethnically indigenous president, has polarized the country by trying to spread the wealth from the resource-rich eastern plains to the poor western Andean region.

After a court struck down his call for a December referendum, saying only the congress had to power to convoke one, Morales led a demonstration of 50,000 indigenous peasants and leftist activists into the capital to pressure the congressional opposition.

Fearing further violence, opposition leaders agreed to the plebiscite, after first extracting a pledge from Morales that he would not seek re-election in 2014, if he wins a second term. (dpa)