Bolivia's President Evo Morales has said he will call a new election after international monitors questioned the validity of his victory last month.
The Organization of American States (OAS), which monitored the elections, called for the result to be annulled.
Mr Morales's announcement comes after weeks of anti-government protests over reported irregularities and fraud.
The president, who was first elected in 2006, has denied any wrongdoing and ignored calls to resign.
In his announcement on Sunday, he also said the country's electoral body would be overhauled before the poll, with parliament choosing its members.
Mr Morales, who is Bolivia's first indigenous president, told reporters that he had made the decision "to reduce all tension".
"We all have an obligation to pacify Bolivia," he said.
What did the OAS say?
In its preliminary report on Saturday, the OAS said it had found "clear manipulations" of Bolivia's voting system and it could not verify the result of the 20 October race.
During the audit, it said it found physical records with alterations and forged signatures, and evidence of wide-scale data manipulation.
The international body concluded it was unlikely that Mr Morales had won by the 10% margin required for a victory. It recommended that a new electoral commission be set up before a fresh election could take place.
For many, this will be seen as a climb-down after weeks of unrest. Evo Morales's position was looking increasingly untenable over the weekend, with police units in several cities joining protests against the government.
Now he's reacted to the report by the OAS, it seems he's prepared to make some concessions. But for many others, it won't be enough to quell the anger.
In his press conference he said there would be new elections but didn't give any detail as to when. Plenty of people doubt his intentions to move the country forward in a democratic manner.
And many in the opposition won't accept Mr Morales as a candidate. He's been accused of rigging the vote the first time, and his critics don't believe clean elections are possible if he is running again.
Why has there been opposition to the election result?
Bolivia has been rattled by protests, strikes and road blocks since the night of the election.
At least three people have died during clashes. The mayor of a small town was also attacked by protesters earlier this week, who dragged her through the streets barefoot, covered her in red paint and forcibly cut her hair.
Tensions first flared after the results count was inexplicably paused for 24 hours.
The final result gave Mr Morales slightly more than the 10% lead he needed to win outright, giving him a fourth consecutive term.
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