A four-day visit from the new head of the Organisation of American States failed to end a political impasse between Nicaragua's embattled president and the political parties seeking to undermine his powers.

José Miguel Insulza, who became OAS secretary-general last month, this weekend delivered a proposal from President Enrique Bolaños to hold a referendum on legislation that sharply curtails his powers to appoint staff, from cabinet members to regulators. "I think there is genuine cause for concern," Mr Insulza said. "Society continues to function. . . but in the background there is a profound political division that could erupt in a crisis."

Mr Insulza finished a four-day visit to the Central American nation on Sunday, where he had sought to close the rift caused by recent constitutional amendments approved by the opposition-led Congress.

Those changes allow legislators to veto cabinet appointments and to impose appointees upon courts, electoral institutions and regulators controlled by the executive branch. Legislators of Mr Bolaños' political party, angered by the president's anti-corruption drive, joined forces with the leftwing Sandinista Front after Mr Bolaños prosecuted Arnoldo Aleman, his predecessor.

Mr Bolaños had rejected the congressional reforms, which a Central American Court ruled in violation of the separation of powers. A congressionally appointed comptroller has demanded Mr Bolaños be removed from office for ignoring the law.

The situation worsened last week when Sandinista representatives took control of the post office, telecommunications regulator and other government agencies.

Mr Bolaños proposed the referendum for November the same month Daniel Ortega, the Sandinista leader, has proposed holding a new presidential election, one year early.