A Colombian soldier patrols in Caqueta. The country's largest rebel group said today it would vacate a zone under its control after peace talks with the government failed.

In what seemed the end of all hope of finding a last-minute deal to avert an army offensive, the guerrillas said they would retreat into the jungle following the president's rejection of their last-minute proposal to save three-year-old peace talks.

``We will comply with the commitment to retreat from the towns exactly as was agreed between you (Pastrana) and the (FARC) Commander-in-Chief Manuel Marulanda Velez at the start of the process,'' said a communique read by senior FARC commander Simon Trinidad.

The Revolutionary Armed Forces of Colombia -- known by the Spanish initials FARC -- also proposed a hand-over ceremony for the towns in the Switzerland-sized chunk of cattle land and jungle Pastrana gave them at the start of talks in late-1998.

Thousands of troops and tanks have massed near the enclave in preparation to sweep into the southern Colombian rebel stronghold, a contingency the army has long planned for. The military says the FARC has used the enclave as a prison for kidnapping victims and a base for a drug-trafficking business.

But the FARC said they still hoped talks would eventually end a 38-year-old war that has claimed 40,000 lives in the past decade. They blamed Pastrana's decision to reject their proposals on Saturday on the country's upper classes.

``Once again the selfish interests of a privileged and rich minority are being favored over the interests of 40 million Colombians,'' read the communique.

In a midnight address to the nation on Saturday, Pastrana told the rebels they had until 9:30 p.m. on Monday (0230 GMT on Tuesday) to get out.

The rebels are expected to slip into the bush. Most of the group's 17,000 guerrillas have always stayed outside the zone anyway despite peace talks.

U.N. ENVOY REMAINS

Rejecting the FARC peace proposal, Pastrana told the rebels the only chance they had of avoiding a military offensive would be a clearer response to government demands they directly discuss a cease-fire and end their campaign of kidnapping.

The president huddled with military chiefs and U.S. Ambassador Anne Patterson in Bogota on Sunday.

U.N. peace envoy James LeMoyne said he would stay until the 11th hour in the FARC's enclave, where he spent the previous two days in failed negotiations with Latin America's largest and oldest guerrilla force.

Speaking from the Cazadores military base, which was abandoned by the army when the enclave was handed over, LeMoyne said he would remain in the FARC zone -- in part to protect the civilian population from possible reprisals by rebels or far-right paramilitary forces.

``We are going to stay ... so that the other (armed) actors in the country respect the civilian population,'' he said.

The 120,000 mainly poor people who have lived under FARC rule awoke on Sunday fearing for their lives. Many local residents prayed they would escape retaliation from the army or the paramilitaries.

``I haven't done anything to anyone. I am afraid ... I just hope they leave me alone,'' said Eulicer, 39, as he carried groceries through the dusty streets of San Vicente.

Sectors of the Colombian army not only fail to hunt down the paramilitaries but actually cooperate with them, according to human rights groups.

The government has promised to guarantee the safety of the civilian inhabitants of the demilitarized zone.

On Thursday, Pastrana gave LeMoyne 48 hours to meet the FARC and hammer out a proposal to resurrect peace negotiations -- which had been paralyzed for three months by rebel demands that the government relax security restrictions around their territory.

Just minutes after the Saturday night deadline expired, weary rebel commanders said they had sent a 14-point proposal to Pastrana. On the key issue of border security controls, the rebels had suggested referring disputes over roadblocks outside their enclave to a special commission.

But Pastrana dismissed this as another attempt to stretch out the talks and avoid real progress.

The 47-year-old president, who steps down in August, has devoted his term in office to striking a deal with the FARC.

Now Colombia faces a possible upsurge in rebel violence just as it prepares for presidential elections in May.

The United States, which has given Colombia more than $1 billion in mainly military aid for the anti-cocaine ``Plan Colombia'', calls the FARC ``terrorists'' and had promised support for Pastrana's decision on talks.