The Foreign Secretary attacked the leader's rare television address as full of "empty promises" that would "fool no-one".
In his first speech to the nation since June, President Assad said the peace plan includes a national reconciliation conference and a new constitution but claimed it could only get under way after Western nations stopped funding and arming rebel groups.
Assad said: "We never rejected a political solution... but with whom should we talk? With those who have extremist ideology who only understand the language of terrorism?"
"Or should we with negotiate puppets whom the West brought... We negotiate with the master not with the slave."
More than 60,000 Syrians have been killed since the uprising began in March 2011, according to UN estimates.
Prime Minister David Cameron earlier reiterated his calls for the Syrian leader to go.
"My message to Assad is go," he told BBC 1's Andrew Marr Show. "He has the most phenomenal amount of blood on his hands."