The country's president has also announced strict controls on movement within the country in an attempt to catch the assassins.

James Reynolds: "Assassination has worsened Paraguay's already critical political situation"

Mr Argana was on the way to his office in the capital, Asuncion, when he was fatally wounded in a grenade and shooting attack on his car.

He was taken to a nearby hospital, but he died shortly afterwards.

The assassination is the latest blow to a nation torn by a power struggle in the Colorado Party that has ruled it for half a century.

Police said the attack was carried out by gunmen wearing camouflage uniforms. The driver of the car and Mr Argana's bodyguard were injured in the attack.

No motive was immediately reported for the attack and the identity of the attackers remained a mystery.

But BBC Latin America Correspondent James Reynolds said Paraguayans were already are linking the death to country's current political crisis.

Political infighting

Vice President Argana after voting

Paraguay has seen months of bitter political infighting culminating in the decision last Thursday by Paraguay's Congress to begin the impeachment hearings against President Cubas.

The president is accused of abusing his power by ordering the release from jail of an ally - former army chief Lino Oviedo, who had been imprisoned for his part in a 1996 coup plot.

The head of the country's supreme court ordered President Cubas to send General Oviedo back to prison on Friday but the president refused.

The release of the general led to a split within the ruling Colorado party, with rival factions supporting Mr Cubas and Mr Argana.

President Raul Cubas had accused Mr Argana of trying to oust him. If the impeachment had resulted in Mr Cubas being removed from office, Mr Argana would have taken over the presidency.

Investigation under way

The killing took place in the capital Asuncion

Three suspects were being sought in connction with Mr Argana's assassination. Authorities found a burnt-out getaway truck blocks from the scene.

A senator from the ruling Colorado Party, Juan Carlos Galaverna, said Mr Argana was shot repeatedly.

Hundreds of bystanders massed around the roped-off site of the attack, while police with white gloves searched for evidence around his vehicle.

Call for calm

In an address to the nation, President Raul Cubas Grau announced the closure of the country's borders with Argentina and Brazil to assist in the manhunt for the vice president's killers.

Amid reports of explosions outside the Supreme Court of Justice and the Congress building in the capital, the president also announced that troops would be sent onto the streets in an attempt to maintain peace.

"Paraguay and its people are in need of urgency, order, and tranquility," Mr Cubas said.

He appealed to his detractors not to make Mr Argana's death a political issue.

"I am not considering resigning from office," he insisted, adding that he intended to serve out his 4-year term which began last August.

Paraguay regained democracy in 1989, after 35 years of dictatorship.

Mr Argana served as foreign minister under former dictator Alfredo Stroessner.