Sri Lanka's Tamil Tiger rebel leader, Velupillai Prabhakaran, has said he will revive demands for a separate state, if peace talks remain stalled.
Red and yellow flags have been hung up in Tamil-controlled towns
But he denied the charge that his rebels were using the peace process to prepare for further war, with the final
aim of securing total independence.
He was speaking on Heroes Day, when the Tigers pay homage to slain comrades.
The peace process is in on hold because of deep differences between Sri Lanka's president and prime minister.
Mr Prabhakaran used his speech to deny the Tigers were planning independence, or a resumption of their armed struggle.
But he warned President Chandrika Kumaratunga and her rival, Prime Minister Ranil Wickramasinghe, that they must resolve their feud and rescue the peace process.
The conflict has lasted for 20 years
If Sinhala politicians continued to oppose reconciliation and rights for the Tamils, said Mr Prabhakaran, "we have no option other than to secede and form an independent state".
During earlier talks with the government, the Tamil Tigers had indicated they would drop long-standing demands for a separate state, if other conditions were met.
A draft proposal they submitted to negotiators four weeks ago outlined plans for a Tiger-run authority in northern and eastern parts of the island.
Mr Prabhakaran's speech was the main event during Heroes Day, celebrated in rebel-held parts of northern Sri Lanka.
Towns in the region have been covered in colourful flags, as loudspeakers blare out war songs, praising more than 17,500 fallen fighters.
Thousands of Tamils from northern and eastern areas of the island were bussed into the stronghold of Kilinochchi to listen to Mr Prabhakaran's annual address.
On Wednesday, Mr Prabhakaran held controversial talks with European Union (EU) envoy Chris Patten.
The island's peace process has been in deadlock since President Kumaratunga dramatically intervened in the government's handling of talks with the rebels.
President Kumaratunga sacked three ministers and temporarily suspended parliament earlier this month, citing fears that Mr Wickramasinghe had given too much ground to the rebels.
Tensions over the peace process resurfaced during Mr Patten's visit.
He was greeted upon arrival by about 200 protesters angry at his decision to meet Mr Prabhakaran, which, they felt, was tantamount to recognising the rebels as a legitimate force.
After their meeting, a spokesman for Mr Prabhakaran said the Tigers also wanted peace - but it was up to the government to push the process forward.
Mr Prabhakaran (right) receives Mr Patten
As well as meeting Mr Prabhakaran, Mr Patten also held talks with Mr Wickramasinghe and President Kumaratunga.
The EU is a major player in Sri Lanka's peace process, having promised billions of dollars in aid if the Tigers and the government can reach a settlement.
Mr Patten's visit was intended to aid peace talks between the rebels and the government.
A spokesman for the government, GL Peiris, struck an optimistic note after Mr Patten ended his visit.
Mr Peiris said a committee appointed by the prime minister and the president had made considerable progress in finding a way out of the constitutional impasse.
"The resumption of a dialogue (with the Tigers) will not yield tangible results without the question of who is in charge of the peace process resolved," said Mr Peiris.
More than 60,000 people have died since the rebels began their fight for a homeland for minority Tamils in Sri Lanka's north and east in 1983.