By Candace Piette
BBC News, La Paz
Mr Morales is planning to stand for re-election in December
Standing on the balcony of the presidential palace in La Paz, Bolivian President Evo Morales was greeted by cheers and chanting by thousands of his supporters.
"Here begins the new Bolivia. Here we begin to reach true equality," he told them as exit polls showed voters had backed a new constitution that sets out greater rights for Bolivia's indigenous majority and allows the president to run for re-election.
"I voted for change and I like the way Evo Morales works for us, the poor, not the rich," said one woman in the crowd, who had come from neighbouring Argentina to take part in the referendum.
But amid the celebrations of Mr Morales's supporters, the rejection of the charter in some parts of the country suggests Bolivia is as divided as ever.
Mr Morales had campaigned since he came to power in 2006 to rewrite the constitution to redress profound social inequalities in one of the poorest countries in Latin America.
It took two and a half years to draft the 411 articles of the new constitution, the process mired in disputes between the Morales government and the right-wing opposition in four of Bolivia's nine regions.
The process was halted many times by opposition boycotts, rioting and street violence.
Bolivia's Congress approved holding a referendum only after Mr Morales agreed last October to make a number of concessions on several key issues in the original text, including agreeing to run for only one further five-year term.
Vice-President Alvaro Garcia Linera, who is considered one of the intellectual architects of the draft constitution, hailed the outcome of Sunday's vote.
The new constitution has provoked deep divisions in Bolivia
"This will be an egalitarian Bolivia, a Bolivia that leaves behind a dark, colonial, racist past," he said.
But he acknowledged that the government faced a rocky path ahead.
"I am not saying there will be no more conflict, there will be tensions for a while, I say a decade... but we will have built a state on three principles: the economy under state control, equality, and the territorial decentralisation of power," he said.
Many critics argue that President Morales mishandled his mandate for social change by polarising public debate instead of uniting it around the constitution.
The key elements of the new constitution include recognition of 36 distinct Indian "nations", increasing the autonomy of Bolivia's nine regions, establishing state control over key natural resources such as gas, and setting limits on land ownership.
For Oscar Ortiz, the president of the opposition-controlled Senate, the constitution has become a war of ideas.
"The result.. [of the vote] will show deep divisions between regions and between Bolivians in each region. A confrontation between ideas and visions about how this country will build its common future will continue," he said ahead of the referendum.
Although the new constitution was on course to be passed with about 60% support overall, the "no" vote garnered majority backing in four regions where the opposition holds sway - Pando, Santa Cruz, Tarija and Beni.
These tropical lowlands contain most of Bolivia's natural gas production and are responsible for most of its agricultural output.
Re-election: Allows Mr Morales to stand for re-election in Dec 2009
Indigenous rights: Stresses importance of ethnicity in Bolivia's make-up. A whole chapter devoted to indigenous rights
Autonomy: Power decentralised, four levels of autonomy - departmental, regional, municipal and indigenous
Resources: Sets out state control over key economic sectors, state sovereignty over vast natural gas fields
Judiciary: Indigenous systems of justice same status as official existing system. Judges will be elected, and no longer appointed by Congress.
Land: New limit on ownership 5,000 hectares (12,355). But measure not retroactive.
The population there tends to be wealthier and more ethnically mixed than the mainly indigenous population of the Andean high plateau.
Given the split in the vote, vocal opposition to President Morales's plans seems set to continue.
And with the reforms needing to be enacted by Congress, the constitution is unlikely to pave the way for real social change in a hurry, says veteran opposition politician and former president, Carlos Mesa.
"We will have so many legal battles to go through that I fear that last year's belligerent climate will continue this year. President Morales is not coming at this with open hands, he has built trenches and dug in," Mr Mesa said.
Continuing political struggles could also once again erupt into violence.
"Any change brings violence with it, whether the change will benefit them or us, we'll have to see, but there will be violence," said Victor Hugo Rojas, a leader in the Union of Santa Cruz Youth, a radical civic group said to be behind much of last year's violence there.
"It has to happen and may get worse... We are ready for confrontation if necessary."
President Morales has already said that he is prepared to enforce the spirit of the constitution by presidential decree if the reforms get snarled up in Congress.
Meanwhile, Sunday's "yes" vote has kick-started his re-election campaign.
Under the new constitution, he will be able to stand once more in elections due in December, meaning he could remain in power until 2014.