TAIPEI -- Taiwan's President Chen Shui-bian said Monday he would not impose martial law to resolve a dispute with the main opposition that threatens to derail a referendum and legislative election.

The referendum -- scheduled to take place Jan. 12, the same day as the legislative poll -- will ask voters if they want the state to confiscate assets acquired illegally by the Nationalist Party in the 1950s.

The Nationalists and Chen's Democratic Progressive Party disagree over whether voters should be allocated ballot sheets for the two votes simultaneously at polling stations. The Nationalists argue that such a procedure would compel people to vote in both polls and would violate the sanctity of the secret ballot, saying each polling station should have two separate points for collecting ballot sheets for each vote.

The two sides reached a stalemate after Taiwan's 18 Nationalist-controlled cities and counties insisted last week they would hand out separate ballots at different points in polling stations, even though the DPP proposal was backed by the Central Election Commission.

On Sunday night, Chen appeared to be threatening to declare martial law to get his way.

"People have made some suggestions, including declaring martial law or postponing the elections," to resolve the dispute, Chen told supporters at a rally in the Taipei suburb of Shulin. "Those were serious suggestions, and I would consider them."

But Monday, he made an about-face, telling visitors to the presidential office: "I would not reimpose martial law during my term." His term ends May 2008.

The Nationalists ruled Taiwan for half a century before losing the presidency to Chen in 2000. In 1987, the government ended four decades of martial law to pave the way for democracy and free elections.