Armed Basque separatist group Eta says it will not carry out "armed actions" in its campaign for independence.
In a video obtained exclusively by the BBC, the group said it took the decision several months ago "to put in motion a democratic process".
The Basque interior minister called the statement "insufficient". Madrid has previously insisted that Eta renounce violence and disarm before any talks.
Eta's violent campaign has led to more than 820 deaths over the past 40 years.
It has called two ceasefires in the past, but abandoned them both.
This latest announcement comes after the arrests of numerous Eta leaders and during an unprecedented period of debate within the Basque nationalist community over the future direction of policy, says the BBC's Clive Myrie in San Sebastian.
Eta has been coming under increasing pressure to lay down its weapons, our correspondent adds.
It is unclear whether Eta is declaring a permanent or temporary ceasefire.
In the video obtained by the BBC, three hooded Eta fighters are shown sitting behind a desk with the Eta flag pinned up behind them.
The figure in the middle reads out a prepared statement defending Eta's campaign of violence, but towards the end she says the group now wants to achieve its aims by peaceful, democratic means.
"Eta confirms its commitment to finding a democratic solution to the conflict," the statement says.
"In its commitment to a democratic process to decide freely and democratically our future, through dialogue and negotiations, Eta is prepared today as yesterday to agree to the minimum democratic conditions necessary to put in motion a democratic process, if the Spanish government is willing," it says.
It adds that Eta "took the decision several months ago not to carry out offensive armed actions".
The statement ends: "We call on all Basque citizens to continue in the struggle, each in their own field, with whatever degree of commitment they have, so that we can all cast down the wall of denial and make irreversible moves forward on the road to freedom."
Eta announces that it took the decision several months ago not to carry out armed actions.
Nationalist politicians in the Basque country welcomed the announcement and called on the Spanish government and the international community to respond positively.
The pro-Eta party Batasuna, which has been banned since 2003 on the grounds that it is Eta's political wing, is one of two Basque nationalist parties to have called on Eta to declare "an internationally verifiable ceasefire" days earlier.
But Rodolfo Ares, the interior minister for the Basque region, called Eta's statement inadequate.
"Any declaration that talks about the suspension of terrorist attacks - even if it is only temporary - should be considered as good news," he said.
But he called Eta's declaration "ambiguous" and "absolutely insufficient", because it did not "take into account what the vast majority of Basque society demands and requires from Eta, which is that it definitively abandon terrorist activity".
The Spanish government, which has been studying Eta's statement but is yet to make an official response, has said in the past that it will only negotiate with Eta if it renounces violence and disarms.
The deputy editor of the Basque language newspaper, Gara, which follows the activities of Eta closely, said the Basque people had been hoping for this declaration.
"I think that it's a big step and a positive step," Njaki Soto told the BBC. "I think that's it's something that the majority of the Basque society was waiting [for] or expecting and in that sense I think that it's something that no-one can say that it's negative."
"It will be a long way but it's something that can bring the peace and the justice to the Basque country," he said.
Barbara Duhrkop, a former Socialist MEP whose husband Enrique Casas was murdered by Eta in 1984, said the statement was a positive step but did not go far enough.
"It's still insufficient because they talk about ceasefire, democratic process, but there's nothing about laying down arms and permanence. So I would be very careful, very cautious to evaluate how much worth there is in this announcement," she said.
Founded in 1959, Eta has since then waged a bloody campaign for independence for the seven regions in northern Spain and south-west France that Basque separatists claim as their own.
Controversial peace talks in 2006 collapsed after an Eta bomb killed two people at Madrid airport.
Correction 8 September 2010: Due to a translation error, originally we quoted Eta saying it had decided "not to carry out armed actions"; in fact the term it used was "offensive armed actions"