Syrian President Bashar al-Assad has outlined a new peace initiative, including a national reconciliation conference and a new government and constitution, but demanded regional and Western countries stop funding and arming rebels first.

The president was speaking on Sunday in a rare address to the nation, his first since June. He spoke to a packed hall at the Opera House in central Damascus, and the audience frequently broke out in cheers and applause.

Assad ignored international demands for him to step down and said he is ready to hold a dialogue with those "who have not betrayed Syria".

The Syrian opposition, including rebels on the ground, were quick to reject Assad's proposal.

Louay Safi, a member of the Syrian National Coalition opposition bloc, dismissed the address to the nation as "empty rhetoric”.

"He did not offer to step down, which was a precondition to start any negotiation," Safi told Al Jazeera.

"He has shown that he is a dictator that we cannot negotiate with. I think he has no desire to relinquish power. He wants to crush the opposition and he hopes he can stay over for the next 40 years like his father did."

Opposition leaders have repeatedly said they will accept nothing less than the president's departure, dismissing any kind of settlement that leaves Assad in the picture.

"There's not a single opposition leader who can go public and say 'we will negotiate and compromise with Assad in power', a senior commander of the Free Syrian Army told Al Jazeera.

"He would be on the spot treated as a traitor. We've passed that stage. Now, we're just looking forward to a new era without Bashar al-Assad."

'State of war'

Assad said his nation is in a "state of war".

"We are fighting an external aggression that is more dangerous than any others, because they use us to kill each other," the president said.

Wearing a suit and tie, Assad spoke before a collage of pictures of what appeared to be Syrians who have been killed since March 2011.

The internet was cut in many parts of Damascus ahead of the address, apparently for security reasons.

As in previous speeches, Assad denied that there was a popular uprising against his family's decades-long rule.

"Is this a revolution and are these revolutionaries? By God I say they are a bunch of criminals," he said.

Political solution

He said Syria will not take dictates from anyone but urged Syrians to unite to save the country.

"Every citizen is responsible for doing what he can to offer something, no matter how simple in his eyes, for the nation is for everyone and we all must defend it with all that we have," he said.

"The first part of a political solution would require regional powers to stop funding and arming [the rebels], an end to terrorism and controlling the borders," he said.

He said this would then be followed by dialogue and a national reconciliation conference and the formation of a wide representative government which would then oversee new elections, a new constitution and general amnesty.

However, Assad made clear his offer to hold a dialogue is not open to those whom he considers extremists or carrying out a foreign agenda.

"We never rejected a political solution ... but with whom should we talk? With those who have extremist ideology who only understand the language of terrorism?'' he said.

"Or should we negotiate with puppets whom the West brought. ... We negotiate with the master, not with the slave."

After his speech, supporters pushed forward to kiss the president's hand.

"With blood and soul we sacrifice for you, O Bashar!" the crowd chanted.

Al Jazeera's Hashem Ahelbarra, reporting from Antakya, in neighboring Turkey, said the speech was "a recipe for further stalemate over the issue of Syria, unless the international community decides to do anything about it.

"But it seems the international community is not really in favor of a decisive victory of the opposition, because they're worried about the potential of the rebels unleashing sectarian revenge killings.

"At the same time, they don't think Assad should stay in power by clamping down on the opposition. They're thinking of different alternatives."

The 21-month uprising against Assad has become a civil war that the United Nations says has killed 60,000 people.

PHOTO CAPTION

Syria's President Bashar al-Assad speaks at the Opera House in Damascus in this still image taken from video January 6, 2013.

Aljazeera