Syed Ali Shah Gilani, who holds sway over youths who have been rioting for several months, described the measures offered by New Delhi as "a time-gaining exercise, unrealistic and mere eyewash," The Guardian reported Sunday.
India has promised to work for the release of hundreds of young protesters arrested in recent unrest and to review the huge security presence in the disputed territory.
As local authorities moved to lift curfews that have paralyzed everyday life for more than two weeks, Gilani called for the people to show their anger, and observers expected further clashes.
Mirwaiz Umar Farooq, another separatist leader, said India's initiative was inadequate because not all parties were being consulted.
The package was announced after a delegation led by Home Minister Palaniappan Chidambaram visited Kashmir last week.
Besides freeing detainees, the proposals include reducing the military presence in civilian areas and possibly lifting hated laws that grant security forces broad powers of search and detention as well as legal immunity.