Prabhakaran, making his first public appearance in more than a decade, said the Tamil Tigers will start talking to the Sri Lankan government in sessions to be conducted in Thailand, but only after the ban on the group has been lifted.
He said the LTTE and Sri Lanka's minority Tamils had fought for a separate homeland, but now they would negotiate with the government and will await proposals.
The guerrillas have submitted their proposals to the government, but those have not been released to the public. They are believed, however, to request the creation of an interim council to administer the Tamil-dominated northern and eastern areas of Sri Lanka.
The LTTE has waged an 18-year-long fight for a separate homeland in the northern part of the island. The rebels said some 17,000 guerrillas and 60,000 Tamil civilians have died in the fighting.
The LTTE often used suicide bombers in its attacks and conducted high-profile assassinations, including Sri Lankan President Ranasinghe Premadasa and former Indian Prime Minister Rajiv Gandhi. Current President Chandrika Kumaratunga lost one eye during a similar attack during an election campaign.
Prabhakaran said the sacrifices by the "Tamil Tiger guerrillas and the Tamil civilians would not come in the way of negotiations with the government, provided the government accepts the proposals put forth by the LTTE."
Prabhakaran said talks with Sri Lankan Prime Minister Ranil Wickremesinghe had moved negotiations forward and he hoped that Kumaratunga, on the opposite side of the political fence from the prime minister, would "not be able to scuttle the peace moves."
The LTTE leader announced plans to meet with other Tamil political parties in the country to sort out the difference with them. Prabhakaran also said he wanted India, which has its own Tamil population, to play a key role in the peace process, though he has been declared a fugitive by India for his part in Gandhi's death.
Prabhakaran refused to comment on the assassination.