Leaders of protests trying to bring down a Mexican state governor they say is corrupt tentatively agreed late on Monday to scale back a months-old occupation of the tourist city of Oaxaca.

After thousands of protesters marched for days to get to Mexico City, the government and leaders of a teachers union said they made a deal that could see the protesters cede control of most of downtown Oaxaca to local police under federal supervision.

Leftist activists and striking teachers have shut down the colonial center of Oaxaca for four months, hoping to force the resignation of Gov. Ulises Ruiz, who they accuse of corruption, heavy-handed tactics and ignoring widespread poverty.

Union leader Enrique Rueda told reporters he agreed to quickly consult the strikers about removing most street barricades in the city and returning to classes but said they would continue to push the Senate to make Ruiz step down.

"Since Ulises Ruiz Ortiz is still there, the conflict has not ended," Rueda said.

As part of the tentative agreement, the government agreed to release protesters who were jailed in recent months and steadily raise teachers' pay in coming years, Rueda said.

"We're prepared to implement the steps immediately," said Interior Minster Carlos Abascal.

Thousands of protesters had walked the 280 miles from pretty colonial Oaxaca City. They arrived at the tattered outskirts of Mexico City on Monday, shouting and waving banners to support their leaders who had been in deadlocked talks with President Vicente Fox's government.

Protesters set up camp outside the Senate, where some tore down barriers as riot police with shields and gas masks looked on. Senators will decide whether or not Ruiz has lost control of Oaxaca state and needs to step down.

In Oaxaca City's central square, protesting teachers were surprised at the terms of the deal.

"This is bad because what we want most is for Ulises to be removed, not so much the salary raise," said teacher Benito Santiago.

Fox had vowed to resolve the conflict before handing power to his ruling party successor Felipe Calderon on December 1.

Protesters had lifted some barricades over the weekend as a sign of good will.

Ambushes and paramilitary-style drive-by shootings, which protesters say were ordered by Ruiz, have killed at least five activists since the conflict began.

A prominent teacher who had opposed the strike was murdered last week, his throat cut. Both sides denied responsibility for the attack.

The protests have left Oaxaca scarred with graffiti and strewn with burned out cars, scaring away tourists who provide the city's main income.

Ruiz belongs to a traditional wing of the Institutional Revolutionary Party, or PRI, which ruled the country for 71 years until Fox's 2000 victory and still wields almost feudal power in some of rural Mexico's poorest outposts.

With additional reporting by Jennifer Szymaszek and Frank Jack Daniel.

Copyright © 2006 Reuters Limited

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