"I'm not going to run away from my responsibilities," Mesa said in a televised address on Thursday, after keeping the country in suspense about his future for the second time in over a week.
After a long night of meetings with cabinet, military and church officials, Mesa seemed hesitant about his decision to stay at the helm of a country in turmoil amid a sweeping rights movement by Bolivia's impoverished native Quechua and Aymara majority.
The former TV journalist said he "profoundly lamented" Congress' rejection on Thursday of his request to bring presidential elections forward by two years to August to choose someone to replace him.
"But I want to tell the country that I am willing to go down this most difficult of paths, since it makes no sense to hand over power right now. It would not resolve the crisis," Mesa said.
This week, Mesa had said that highway blockades set up by protesters furious over his economic policies had put Bolivia on a path to "collective suicide", and he could no longer stay in office.
"It makes no sense to hand over power right now. It would not resolve the crisis"
President Carlos Mesa
However, the president said on Thursday that he had been encouraged after protesters recently took down many of the blockades that had stranded thousands of trucks on jungle highways and caused food shortages in major cities.
"We have to build on this progress and not let the opportunity escape us," he said.
Mesa threatened to quit once last week, then changed his mind after Congress rejected his resignation, fearing his departure could bring more chaos.
His approval rating remains above 60% in most polls, but his agenda has been thwarted by a deadlocked Congress and heavy pressure from protesters that have paralysed the economy.
"We knew he would stay. His threat to quit was just another effort to blackmail the country"
Evo Morales, lower house deputy
The president's relations with both groups are unlikely to improve immediately.
"We knew he would stay. His threat to quit was just another effort to blackmail the country," said Evo Morales, a lower house deputy and leading Indian protester.
Protests have centred on Mesa's plans to open Bolivia's energy sector to more foreign investment.
They have become a rallying cry for a wide range of grievances including anti-US sentiment and long-simmering racial tensions between Indians and the European-descended elite.
Mesa came to power in October 2003 when his predecessor, Gonzalo Sanchez de Lozada, fled the country during a similar Indian revolt that killed dozens.