Mr Correa was forced to flee a protest at a barracks when tear gas was fired by angry troops
A state of emergency has been declared in Ecuador after President Rafael Correa accused the opposition and security forces of a coup attempt.
Mr Correa was earlier forced to flee a protest in the capital, Quito, after tear gas was fired. Troops took over the main airport, forcing it to close.
Unrest was reported in several towns, as Peru closed its border with Ecuador.
The protesters are angry at a new law passed on Wednesday that ends bonuses and other benefits for public servants.
“Start Quote
End Quote Rafael Correa President of EcuadorIf you want to kill the president, here he is. Kill him, if you want to. Kill him if you are brave enough”
On Thursday morning, members of the armed forces and police angry at the austerity measures occupied several barracks and set up road blocks across Ecuador to demand they be abandoned by the government.
Television stations showed images of police setting tyres on fire in the streets of Quito, Guayaquil and other cities. The National Assembly building was also occupied.
In a speech to soldiers from Quito's main barracks, President Correa said: "If you want to kill the president, here he is. Kill him, if you want to. Kill him if you are brave enough.
"If you want to seize the barracks, if you want to leave citizens undefended, if you want to betray the mission of the police force, go ahead. But this government will do what has to be done. This president will not take a step back."
However, Mr Correa was forced to flee the barracks wearing a gas mask shortly afterwards when tear gas was fired by the protesters.
Ecuador has a history of political instability The president was later treated for the effects of the gas at a police hospital, from where he told local media that he had been "attacked".
"They threw tear gas at us. One exploded near my face. It stunned me and my wife for a few seconds, probably minutes," he said. "I had to put on a gas mask and some cowards took it off me so I would suffocate.
"I mean they shot at the president - it's incredible - our security forces, our national police."
“Start Quote
End Quote Gen Luis Ernesto Gonzalez Villarreal Chief of Armed Forces Joint CommandWe live in a state which is governed by laws, and we are subordinate to the highest authority which is the president of the republic”
"It is a coup attempt led by the opposition and certain sections of the armed forces and the police," he added. "Whatever happens to me I want to express my love for my family and my homeland."
Meanwhile, about 300 air force personnel and soldiers took control of the runway at Quito's Mariscal Sucre International Airport, causing flights to be grounded.
The protesters carried signs demanding the government give more respect to the military over benefits, witnesses told the Reuters news agency.
The US embassy said Guayaquil's airport was also closed and warned US citizens to "stay in their homes or current location, if safe".
Despite the unrest, the head of Armed Forces Joint Command, Gen Luis Ernesto Gonzalez Villarreal, said the troops remained loyal.
"We live in a state which is governed by laws, and we are subordinate to the highest authority which is the president of the republic," he said.
"We will take whatever appropriate action the government decides on."
The country's central bank chief, Diego Borja, meanwhile urged its citizens not to withdraw money from the country's banks amid reports of looting. Many schools and business were also closed because of the unrest.
One BBC News website reader in Guayaquil said three of the city's banks had been robbed, and described Ecuador as a "disaster zone".
"We don't know what will happen," he said. "There are no law enforcement agencies working. You can't go out in the streets."
Venezuela's President Hugo Chavez appealed to the people of South America to defend his fellow leader, while Peruvian President Alan Garcia ordered his nation's border with Ecuador closed until Mr Correa's "democratic authority" was re-established.
The US state department said it was "closely monitoring" the situation.
Members of Mr Correa's left-wing party have threatened to block proposals to shrink the country's bureaucracy, prompting him to consider disbanding Congress and ruling by decree until new elections.
Such a move would have to be approved by the Constitutional Court.
Ecuador has a history of political instability. Protests toppled three presidents during economic turmoil in the decade before Mr Correa, a 47-year-old US-trained economist, took power in 2007.
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