The miners want co-operatives to be exempt from a tax rise

More than 20,000 miners belonging to small co-operatives blocked the centre of the administrative capital, throwing dynamite and clashing with police.

After six hours of talks, Mr Morales promised a fund to improve working conditions for the miners.

There was no agreement on a proposed tax rise which the miners oppose.

Two policemen were injured on Wednesday in a second day of clashes with the miners.

Investment fund

Mr Morales said the agreement marked a reconciliation with the mining co-operatives, which about 55,000 of Bolivia's independent miners belong to.

"I've never thought about stamping out mining co-operatives, as some have said," he said after the long meeting with mining leaders.

"This government belongs to the grassroots movements, they (mining cooperatives) have been part of this government and they have to continue," Mr Morales added.

The president promised a $10m (£5.07m) government fund to invest in the mining co-operatives and said he would expand the area where they can mine.

Bolivia's extensive mineral deposits are state-owned.

The co-operatives had been staunch supporters of the left-wing president until last October when they accused Mr Morales of supporting state-employed miners in a violent dispute at the Huanuni mine in which 16 people were killed.

Even before the protest began on Tuesday, the government went back on its plan to raise taxes on the independent miners.

Instead, officials said the tax increase would be directed at larger private mining companies.

President Morales wants to keep the small co-operatives on his side while still taxing the foreign energy companies, the BBC's Americas editor Will Grant says.

Bolivia's mineral exports were worth more than $1bn last year, but the government says it only collected $45.5m in taxes from the mining sector.