Mehmet Ali Talat said the plan would only get in the way of revival of the UN reunification plan, rejected by Greek Cypriot voters last April.
The pull-back proposal is among several "confidence building" measures put forward by the government.
The so-called 'Green Line' has divided Cyprus since the 1974 Turkish invasion.
The government's proposals include disengaging forces from the UN-guarded line within the medieval walls of the divided capital Nicosia and other points on the island.
Greek Cypriot officials said the proposals would require the Turkish military to match the gesture on the northern side of the ceasefire line.
the opening of Famagusta, a port town currently controlled by the Turkish administration, for use by both communities.
The Greek Cypriot government has unilaterally decided to extend its programme to clear thousands of landmines inside the UN buffer zone.
"It is our conviction that these initiatives will form the basis of fostering trust and security among Greek and Turkish Cypriots," said Cypriot government spokesman Kypros Chrysostomides.
But Turkish Cypriot Prime Minister Mehmet Ali Talat dismissed the proposals, saying the same result could have been achieved with the UN plan.
"The measures are a diversion from the real issues," he said. "We cannot achieve anything by different packages of measures. The target on Cyprus should be a comprehensive solution."
The Turkish government was cautious.
"Let's look at what they say. We'll evaluate the proposals with our (Turkish Cypriot) friends and then we will make a decision," said Foreign Minister Abdullah Gul.
Criticism
The BBC's Tabitha Morgan, in Nicosia, says the Cyprus government hopes this proposal will take the sting out of some of the strong international criticism that was directed at the Greek Cypriot community after it overwhelmingly rejected the UN backed plan to reunite the island.
Many Greek Cypriots were not happy with the UN plan's limits on their right to return to property in the Turkish north and the rate at which the 30,000 Turkish troops would gradually leave the island.
The plan was accepted by the Turkish Cypriots but the Greek Cypriots' rejection meant only the south joined the EU.
The EU has said that in response to the referendum result it would reward Turkish Cypriots by easing economic sanctions in the north of Cyprus.
The government's plans have been submitted to the United Nations and the European Commission.
A UN spokesman said the UN welcomed the announcement and remained committed to facilitating all "confidence building measures".