arms," Assad told Britain's Sunday Times newspaper, in a rare interview conducted last week at his Al-Muhajireen palace in Damascus.
"We can engage in dialogue with the opposition, but we cannot engage in dialogue with terrorists," he said in the videotaped interview.
His offer of talks was aired as UN chief Ban Ki-moon and his Syria envoy Lakhdar Brahimi said they were prepared to broker peace talks between the Assad regime and the opposition, after the two sides had proposed a dialogue.
In Iran, Foreign Minister Ali Akbar Salehi said that Assad, a close ally of Tehran, would contest a presidential election next year and it was up to the Syrian people to choose their own leader.
Syria is locked in a two-year-old conflict in which the United Nations estimates more than 70,000 have been killed. But Assad rejected the idea of standing down to end the bloodshed.
"If this argument is correct, then my departure will stop the fighting," the president told The Sunday Times. "Clearly this is absurd, and other recent precedents in Libya, Yemen and Egypt bear witness to this."
Assad turned his sights on Britain, accusing London of seeking to arm the rebels and ruling out any mediation role for Britain. "We don't expect an arsonist to be a firefighter," he said.
British Foreign Secretary William Hague reacted to the interview by charging that the Syrian leader was "delusional" for failing to see that he was to blame for the country's carnage.
Hague also said that he would this week announce more assistance to the Syrian opposition in the form of non-lethal equipment and refused to rule out the possibility of arming them in the future.
"This is a man presiding over this slaughter," he told BBC television. "We are the people sending medical supplies to try to look after people injured and abused by the soldiers working for this man."
-- Police academy, prison attacks --
Asked about a reported Israeli air strike near Damascus in January, Assad said his country would retaliate. "Retaliation does not mean missile for missile or bullet for bullet. Our own way does not have to be announced," he said.
On the ground in the mainly opposition-held north, hundreds of Syrian troops and rebels were killed in a week-long battle for a police academy in Aleppo province, with insurgents seizing control of most of the complex, a monitoring group said.
"Rebels have seized most of a police academy in Khan al-Assal in Aleppo province ... after eight days of fighting that left 200 troops and rebels dead," said the Syrian Observatory for Human Rights.
The Britain-based group said at least 120 army troops were among those killed in the battle for one of the regime's last remaining bastions in the west of Aleppo province. On Sunday alone, rebels had killed more than 34 troops at the facility.
A police source in Aleppo confirmed that much of the academy had fallen into rebel hands, reporting that 40 security forces were believed dead. As many as 300 rebels were among those killed, he said.
The Observatory also reported that Jihadist fighters seized control of a prison in Raqa province on Saturday night, freeing "hundreds" of detainees on Saturday night.
"Government forces pulled out of Raqa's central prison located in the northern part of the provincial capital after clashes that lasted days," said the group, which relies on a vast network of activists on the ground and medics for its information.
A total of 182 people were killed in violence across Syria on Saturday, including 83 rebels and two Palestinians hanged at the Yarmuk refugee camp in Damascus on suspicion of aiding the regime, it said in an updated toll.
The Observatory circulated a picture of the hangings.