By Omer Farooq BBC correspondent in Hyderabad

The Maoists say the authorities have not kept their promises

Their rejection of the proposal is yet another setback to peace talks between the rebels and the state government.

The state's chief minister said the peace process could not continue unless the rebels' weapons were handed in.

Last month the Maoists said they were unhappy with the outcome of the first round of talks with the government.

Modalities of surrender

In a letter to the authorities, Maoist leaders of the Communist Party of India made it clear that issues such as economic self reliance, land re-distribution and the democratic rights of the people were more important than surrendering arms.

They accused the government of stalling the peace process, and raising the issue of arms surrender even though they had earlier promised to hold talks without any preconditions.

The state government insists the rebels must lay down their arms

The chief minister of Andhra Pradesh, YS Rajashekhar Reddy, said on Sunday that his government would invite Maoist leaders for a second round of talks but they would have to be prepared to discuss the modalities of surrendering their arms.

He had said that peace was the ultimate purpose of talks, and that could not be achieved unless the rebels gave up weapons.

The government's latest stand is in sharp contrast to the position it took before the talks began: then the surrender of arms and the terms of a ceasefire did not figure in the agenda.

The rebels have maintained from the outset that they will not give up their armed struggle.

Dissatisfied

Analysts say the deadlock could seriously jeopardise the peace process, which started this year after almost two decades violence in the state.

Maoist rebels have been fighting since 1980 for the creation of a communist state comprising the tribal areas in the states of Andhra Pradesh, Maharashtra, Orissa, Bihar and Chhattisgarh.

More than 6,000 people have died in violence over the past two decades.

A ceasefire has been in place for the past five months following the election in Andhra Pradesh of a Congress party government.

The rebels said they were dissatisfied with the outcome of the first round of talks with the government.

It was the first time that armed Maoist leaders came out of their jungle hideouts for the face-to-face talks.