A political party representing some of Ethiopia's ethnic Sidama people said on Thursday it would postpone plans to declare a new region in defiance of the federal government and would accept the offer of a referendum in five months' time.

The plans would be a direct challenge to the federal government and could encourage eight other ethnic groups to make similar demands.

"Now the most important thing is peace for our people," Million Tumato, president of the Sidama Liberation Movement Party, told Reuters. "Still the five months timeline is not specific as it doesn't indicate when the referendum will take place."

Earlier on Thursday protesters in the Ethiopian city of Hawassa had blocked roads and burned tires after security forces thwarted a meeting of activists to declare a new region for their Sidama ethnic group, witnesses said.

The declaration would have been a test of whether Prime Minister Abiy Ahmed's federal government can stick to its commitment to peaceful political reforms amid increasing demands from competing ethno-nationalist groups.

Another official from the SLM blamed the national electoral board for the protests in Hawassa.

"It tested the people's patience. We could have avoided this situation had they acted one week ago," said Dukale Lamiso, chairperson of the Sidama Liberation Movement. "Nonetheless, we accept the timeline and we are ready to cooperate."

Hawassa is the capital of the multi-ethnic Southern Nations region but some Sidama - who make up the largest group there - want it as the capital of their own new entity.

Almost all shops were closed and few cars were on the streets in Hawassa on Thursday as protesters wearing traditional red, white and yellow striped Sidama scarves and hats marched to the venue of a planned meeting of Sidama elders and youth.

But activists told Reuters that security forces prevented them from accessing the meeting venue, and that mobile data had been blocked in an apparent move to impair their means of communication.

There were no immediate reports of violence. Authorities had no immediate comment on the situation in Hawassa, 275 km (170 miles) from the national capital Addis Ababa.

On Tuesday, the National Election Board tried to defuse the situation at the last minute by promising the Sidama they could hold a referendum on having their own region within five months.

But some activists said they had already requested a referendum a year ago with no response. The constitution guarantees the right to a referendum within a year, but does not say what should happen if it is not held.

The federal system in Africa's second most populous country is meant to allow larger ethnic groups some autonomy. But smaller communities say they have been sidelined.

The country has seen a rise in violence since Abiy began reforms, which have included ending bans on political parties, freeing political prisoners and welcoming home rebel groups.