Chile's embattled President Michelle Bachelet sought to get her reform agenda back on track in her annual address to Congress, as anti-government protests outside descended into clashes with police.

Bachelet, who has been struggling to reboot her administration amid a series of corruption scandals, fulfilled a key promise from her 2013 election campaign by announcing a bill to provide free university education to 260,000 of the poorest students, starting next year.

"This measure is consistent with what we proposed and we are going to continue to move forward with determination toward free [education] for all," she told politicians in her state of the nation address.

The bill, to be introduced in the second half of the year, will initially cover 60 percent of the poorest students, expanding to 70 percent in 2018 and 100 percent in 2020, she said.

The announcement did little to placate some 6,000 protesters outside the Congress building in the port city of Valparaiso, many of them students demanding greater participation in the reform process.

The rally turned violent as masked protesters hurled stones and other projectiles at police, who fired back with water cannon.

Twenty people were wounded, including a student who suffered a severe wound to the head, said police, who made 37 arrests, the AFP news agency reported.

Bachelet's popularity has plunged to its lowest ever, 29 percent, since accusations emerged that her son and his wife used political influence and inside information to make $5m on a property deal.

A separate campaign-finance scandal involving some of the country's biggest firms has also been damaging.

With protesters calling for her resignation, the Socialist leader's ambitious agenda to overhaul the inegalitarian education system and change the constitution inherited from military ruler General Augusto Pinochet have all but ground to a halt.

Bachelet has not been implicated in her son's corruption case, and denies any knowledge of the property deal.

But the scandal has been damaging for a politician who vowed on the campaign trail to fight inequality and the privileges enjoyed by the Chilean elite.

In her speech, Bachelet repeated her promise to begin drafting a new constitution in September, but did not go into details.

The current constitution was ratified in a 1980 plebiscite, in the middle of Pinochet's rule that lasted from 1973to 1990.

It has been amended but never fundamentally overhauled since the return to democracy.