Peruvian protesters freed 48 police officers from captivity on Tuesday but the government was still struggling to end a week-long blockade over mining taxes as workers went on a strike at a second copper mine.

Residents of Moquegua province have occupied roads, including the main highway to Chile, and severed access to the Ilo smelter and Cuajone mine of Southern Copper Corp, Peru's top copper producer, to demand that their province receive a bigger share of taxes paid by the company.

"All police who were illegally taken hostage have been freed," said Jorge del Castillo, President Alan Garcia's chief of staff. He urged protesters to negotiate a deal to divvy up mining taxes and call off roadblocks that have caused food and fuel shortages.

Hours before protesters were persuaded to release the hostages, union workers at the Cuajone mine started a two-day strike for better benefits, the latest sign that Garcia is being pressured to spread the wealth from a six-year economic boom to labourers and the poor.

Police officers, although armed with tear gas, were overpowered by thousands of club-wielding protesters on Monday when they tried to break a blockade at a bridge.

The police, some wearing bloody bandages, were then herded into a church and surrounded by demonstrators. Twelve of the 60 officers were let go earlier on Tuesday to be taken to a hospital, and soon the remaining hostages were freed.

"We have taken a step forward in good faith so that the police don't have to stay in the church," said Roman Catholic Bishop Marco Antonio Cortez, who helped broker the agreement.

The protests started with 5,000 people and have grown to include 20,000 at times as Garcia, whose approval rating hovers at 35 percent, faces calls to reduce poverty quickly.

Delays could erode support for his free-market programs at a time when left-wing parties are eyeing Peru's next presidential election in 2011. The poverty rate, while falling, remains near 40 percent.

PROVINCE CUT OFF

The blockade has cut road links to Tacna, Peru's southernmost province, and the government has been forced to send tanker ships with gasoline to replenish supplies.

Moquegua, more than 700 miles south of the capital, blames the central government for allowing Tacna to get a greater share of taxes generated by Southern Copper.

Residents in provinces like Moquegua say Peru's economic surge has passed them by, even as mining companies reap big profits.

The strike at Southern Copper comes as Peru's third-largest copper pit, Cerro Verde, was in its eighth day of a labour walkout, union leader Leoncio Amudio said.

The mine's owner, U.S.-based Freeport-McMoRan, has said production remains steady and that the government has declared the walkout illegal, meaning labourers could eventually lose their jobs if they fail to return to work in coming days.

Peru is a leading global exporter of minerals and Alberto Adrianzen, a political analyst, said other regions could also protest perceived unfair distribution of mining tax revenues.

"This could spread to other provinces," he said. "The government needs to overhaul the way it shares mining revenue with the provinces."