The Mozambican government announced on Wednesday that it was scrapping a planned increase in bus fares as the death toll from riots sparked by the price hikes rose to three.

The authorities had initially said one person was killed and 60 others were wounded during Tuesday's clashes between protesters and police in Maputo.

But according to a new statement from the Health Ministry, three people are now known to have died and nearly 70 more were wounded seriously and receiving hospital treatment in the normally tranquil capital.

Calm had returned to the streets of Maputo on Thursday after the riots, which residents said were the most serious since the former Portuguese colony won its independence in 1975.

The municipal council said that more than 2 000 vehicles were badly damaged during the unrest while hundreds of shops and public buildings were either looted or suffered serious damage.

Clearly rattled by the scale of the rioting, the government called a halt to the fare hikes and promised to hold talks with the unions.

"After talks with the transportation union, the government decided to cancel the increase in transport fares," said Transport Minister Antonio Mungwambe.

"We are taking three days of talks to find another solution," he added during a press conference that was broadcast on national television.

The violence had broken out after demonstrators blocked the main highway leading into the capital at around dawn on Tuesday, setting fire to tyres and then attacking property.

As the protests spread through slum areas of the capital and a number of shops were attacked, police fired bullets into the air in a bid to disperse the crowds.

The protests against the new bus fares come after government and transport operators agreed to raise prices on certain routes by 25%. -- Sapa-AFP