Prime Minister Zulfiqar Ali Bhutto, fighting a militant political opposition bent on bringing him down, has announced a nationwide referendum on whether he should continue in office with expanded powers or be tossed out.

I" go to the people and place my fate in the hands of the people," Bhutto declared today in an address to a cheering National Assembly. Only members of his own party attended the session.

The opposition Pakistan National Alliance immediately denounced the proposal as a bid by the embattled Bhutto to win endorsement of his "dictatorship." The Alliance said it would call for a boycott of the vote.

The prime minister made his televised address as it appeared that some military support crucial in Pakistani politics, was slipping away from him. Lt. Gen, Mohammed Iqbal, top martial law official in Lahore, resigned, a government source reported. Earlier this week, four brigade commanders and 55 junior officers reportedly resigned, apparently to protest the use of the army against demonstratores win the referencedum he will reassert his authority over the badly divided country in an uncompromsing manner that could further curtail democratic institutions in Pakistan.

"The framework of the country, the structure of the country will have to be adjustes . . . to be able to meet all future crises and future problems of Pakistan - according to our judgement," he said.

The prime minister gave no details of the mechanics of the referendum. He did not say what question the voters will be asked to decide or give a date for the vote. He also failed to say if opposition leaders would be released from prison, if martial law will be relaxed or who will supervise the voting and the vote count.

Bhutto also warned of "foreign intervention" if opposition protests continue.

Government sources have been saying that Iran and India have massed armoured columns near Pakistan's borders.Earlier, Bhutto accused the U.S. Central Intelligence Agency of backing opposition protests.

On Wednesday, Bhutto and Sen. Ghulan Jillani met with opposititon leader Maulana Mufti Mahmud in the police guesthouse where jailed politicians are being held. Bhutto reportedly asked Mahmud to drop his demand for a new general election because of the "urgent military situation.

Gen. Jillani was said to have brought maps and charts to demonstrate the alleged danger.

Pakistan's relations with Iran and India have improved in recent years and observers said there was no reason these countries would want to intervene in Pakistan. Bhutto's allegations, however, stimulate the deep feer of Pakistaini's that their country which lost its eastern wing in 1971, might be further fragmented.

Today Bhutto read a letter from Mahmud rejecting further talks or indirect negotiations until the opposition's demands are met. Along with new elections, the Alliance is demanding Bhutto's resignation and dissolution of the Assembly.

Flourishing the letter before the Assembly Bhutto said with a gesture of exasperation: "Because I have become the central issue of this mudsliding, then I will go before the people and place my future in the hands of the people."

He added: "I am prepared to offer my own sacrifice."

As the Alliance pressed its street campaign to unseat Bhutto, police fired on a crowd of antigovernment demonstrators in the central Pakistani city of Multan, killing one person and injuring 20, and informed source reported.

Security forces also fired o protesters in Karachi, Pakistan's largest city. One person was reported killed and five were reported injured.

More than 300 persons have been killed in eight weeks of political violence in Pakistan.