In scenes unprecedented in recent Indonesian history, Habibie was thronged by more than 2,000 students and workers during a visit to the industrial city of Surabaya in East Java.

There were reports of minor clashes with police, but the protests -- demanding Habibie curb surging prices or step down -- passed off without serious incident.

"In facing these heavy challenges, I call on all circles in society to maintain patience and clear thinking," he said in a speech to open a sports stadium.

"I am fully aware this difficult situation often makes us lose patience. A few among us have been encouraged to do various actions that can make the situation more difficult."

The protests, following student demonstrations earlier in the week in Jakarta, are one of the biggest against Habibie since he took office three months ago following the downfall of autocratic former president Suharto after 32 years in power.

Police held the protesters back from the governor's house in Surabaya, allowing Habibie and his small convoy of vehicles to move on unmolested to his next appointment in a nearby town.

"The student movement has not stopped this struggle. We'll continue our fight until we have total reform. Habibie is nothing more than a puppet of Suharto," one student leader, Taufik, told reporters.

After Habibie had left the governor's house, police allowed hundreds of protesters into the grounds where they listened to speeches from student leaders.

Students were at the vanguard of the mass rioting in May which eventually forced Suharto to step down in the face of a collapsing economy.

The focus of the latest protests has been on spiralling food prices.

Rice prices have more than trebled in the past year, adding to the misery of a country which in the last few months has seen its economy slide into its deepest recession in three decades amid violent political upheaval that ended Suharto's rule.

Habibie said he was aware that the crisis had assumed menacing proportions but said there would be a way out.

"If the crisis is not soon overcome, it is not impossible that it can threaten our nation's unity that we have built up with difficulty," he said.

But he added: "as a nation that is devoted to religious teachings, we are certainly convinced that in the middle of the difficulties there will be a way out.

"Our hard struggle to solve the economic crisis should not be affected by the challenges that we face. The more heavy the challenges, the more sacrifices and hard work that we must do," he said.

Military officials said about 1,000 troops and a similar number of police had been deployed through the country's second-largest city, the capital of East Java, to quash any protests.

"We had to deliver a lot of troops so the presidential visit can pass safely," said military official Colonel Bambang Satriawan at Surabaya's military headquarters.

"The planned demonstration disgraces the image of East Java," he added.

The student protests took their toll on the rupiah which tumbled below 12,000 to the dollar on Wednesday after a rare respite in the past two weeks when it had begun to recover.

The protests have added to concern over the rising reports of looting and rioting around the country, as increasingly impoverished communities raid shops and warehouses.

On Wednesday, hundreds of people looted warehouses and trucks of rice in two parts of the country, a military official and witnesses said.

Many of the warehouses were owned by ethnic Chinese, Indonesia's most economically successful ethnic minority and the frequent target in recent months of violent attacks.

The International Labour Organisation recently warned that two-thirds of the country's 200 million people will have sunk below the poverty line by the end of next year without a radical improvement in the economy.