President hold talks with opposition leader as troops fire shots at protesters.
“A larger tragedy has to be avoided,” he said.
Morales’ declaration of martial law in Pando came after 16 people – most of them Morales supporters – were killed in what the government called an ambush.
Pando and three other pro-independence provinces are opposed to a new constitution and land reform plan.
Opposition leaders want Morales to cancel a December referendum on a new constitution that would lend him greater powers and the chance to run for a second consecutive term in office.
The draft constitution would also allow state authorities to transfer fallow land to landless peasants.
Morales, who is Bolivia’s first indigenous president, agreed to hold talks with the governors of the breakaway provinces before imposing martial law on Pando.
But he has said he will extend martial law across the other three opposition provinces should the situation deteriorate there.
The clashes in Bolivia come after Morales and Chavez expelled the US ambassadors in their countries.
The charge that Washington is promoting an anti-government agenda inside their countries, claims denied by US officials.
Morales said on Saturday that “Brazilian and Peruvian assassins under the command of the governor of Pando” were responsible for the deadly ambush of government supporters on Thursday.
But Leopoldo Fernandez, Pando’s governor, said that the violence near the provincial capital Cobija was an armed clash between rival groups, and not an ambush.