The president's 100-minute speech, his first public address since June, contained vague promises of reform, but no sweeping concessions that might split an opposition now determined to end more than four decades of domination by the Assad family.
Assad, 46, offered a referendum on a new constitution in March before a multi-party parliamentary election that has been much postponed. Under the present constitution, Assad's Baath party is designated as "the leader of the state and society."
But the Syrian leader gave no sign that he was willing to relinquish the power he inherited on his father's death in 2000.
"I am not someone who abandons responsibility," he declared.
Assad made scathing remarks about the Arab League, which has sent monitors to check Syria's compliance with an Arab peace plan after suspending it from the 22-member body in November.
"The Arab League has failed for six decades to take a position in the Arab interest ... We should not be surprised," he said, while adding that Syria would not "close the door" to any Arab proposal that respected its sovereignty and unity.
The League condemned an attack on some of its monitors by demonstrators in the port city of Latakia, saying the Syrian government had breached its obligation to protect them.
"Failing to provide adequate protection in Latakia and other areas where the mission is deployed is considered a serious violation by the government of its commitments," it said.
An official earlier said 11 people were lightly wounded in Monday's attack, adding that it had not affected operations.
Video footage on the Internet appeared to show a crowd of pro-Assad demonstrators in Latakia surrounding and climbing onto the white vehicles used by monitors.
The foreign minister of the United Arab Emirates, Sheikh Abdullah bin Zayed al-Nahayan, complained that the Syrians were not giving the monitors freedom of movement.
"Unfortunately there have been attacks on monitors, especially those from (Gulf) countries, attacks from non-opposition elements," he said. "There is no doubt that the task of the monitors is getting more difficult every day because we do not see a decline in acts of killings."
Reviewing progress since the monitors began work on December 26, the Arab League said Sunday Syria had only partly kept an agreement to stop violence, withdraw troops from cities, free prisoners, provide media access and open a political dialogue.
Opposition figures say the monitors have failed to stem the bloodshed, but the League has decided to expand the 165-strong mission and keep it going until it reports again on January 19.
Russia, an old ally of Assad's government, said Tuesday the Arab monitors were playing a stabilizing role in Syria.
Assad complained that Syria was the target of a relentless foreign media campaign. Blaming unrest on "outside planning," he said: "The outside now regrettably includes Arabs."
His approach to unrest, casting it as a foreign conspiracy and countering it with violent repression and hazy promises of reform, resembled that of other Arab leaders confronted by mass protests in the past year. Three autocrats have been toppled.
ARMY TO MAINTAIN COHERENCE
Despite the persistent upheaval in Syria, where an insurgency is growing alongside civilian demonstrations, Assad's security forces seem to retain the upper hand.
"The Syrian regime is likely to retain power throughout most of 2012 ... Although military defections will increase, the army is likely to maintain its coherence," said Ayham Kamel, of the Eurasia Group political risk consultancy.
The Syrian opposition, driven by factional splits, has yet to form a widely accepted representative council.
The United Nations says more than 5,000 people have been killed by security forces since anti-Assad demonstrations began in March, inspired by revolts against Arab leaders elsewhere.
Syrian authorities say foreign-backed armed "terrorists" have killed 2,000 members of the security forces.
Assad acknowledged some "wrong actions" by the authorities but despite the high casualty toll, he denied any policy to shoot demonstrators. "There is no cover for anyone. There are no orders for anyone to open fire on any citizen," he said.
Nevertheless, his priority was to restore order, which could only be achieved by "hitting terrorists with an iron fist."
Burhan Ghalioun, head of the opposition Syrian National Council (SNC), called Assad's speech dangerous because he had "insisted on using violence against our people, considered the revolution a terrorist conspiracy and thus undercut any Arab or non-Arab initiative to find a political solution to the crisis."
The struggle in Syria, Iran's only Arab ally, has alarmed its neighbors. Turkish Prime Minister Tayyip Erdogan, a former friend-turned-critic of Assad, warned Monday that Syria was "heading toward a religious, sectarian, racial war."
Israel said it was making preparations to house refugees from Assad's minority Alawite sect should his government fall.
Ghalioun, the SNC leader, urged the Arab League to refer Syria to the United Nations Security Council to halt Assad's efforts to stamp out protests and to protect civilians.
The League seems divided over such a step, which in the case of Libya led to a U.N. resolution that NATO used as the basis for an air campaign that helped rebels oust Muammar Gaddafi.
Russia and China have opposed any Security Council move on Syria, while Western powers have not advocated military action in a country located in the volatile heart of the Middle East.
The West is also wary because of Syrian opposition splits over the role of armed resistance, the weight Islamist groups should have in any joint opposition body, and the scope for Arab, U.N. or other external action to drive Assad from power.
Jeremy Binnie, a senior analyst at IHS Jane's, questioned whether the outcome in Libya could be replicated in Syria.
"The Syrian regime would be a significantly harder to topple and the fallout potentially far more serious, especially given the country's arsenal of chemical weapons. Libya's air defenses were a pushover by comparison. Syria would be a challenge of biblical proportions compared with Libya," he said.
(Additional reporting by Mariam Karouny and Laila Bassam in Beirut and Khaled Yacoub Oweis in Amman; Writing by Alistair Lyon; Editing by Mark Heinrich)