President Ali Abd Allah Salih shunned an offer by the group to halt attacks on western targets when they demanded 10 concessions on Saturday, according to www.alsahwa-yemen.net - which speaks for the Islamist Islah (Reform) party.
The website said it had received a statement in which "al-Qaida, Yemen" stated it had promised to secure "the blessing of Shaikh Usama bin Ladin" or another top leader of the Islamist network for the proposal spurned by Sanaa.
The group's conditions for not attacking Western targets included "allowing the mujahidin (Islamic fighters) to join their brethren in Iraq, Afghanistan and Palestine," the website said.
But the proposal was rejected by the Yemeni government - "the Americans' second partner in the alliance against Islam and Muslims after the apostate Pakistani regime" of President Pervez Musharraf.
"We sued for peace, but they want war," al-Qaida Yemen charged.
According to al-Sahwa, the group vowed to avenge the killing in November 2002 of Ali Qaid Sunian al-Harthi, alias Abu Ali - a suspected top al-Qaida operative in Yemen.
"The military wing of al-Qaida in Yemen - the Abu Ali al-Harthi Brigades - has for a year been preparing to carry out a devastating strike"
Statement purporting to be from Yemeni branch of al-Qaida
Al-Harthi was killed along with five other Yemenis when a missile fired by CIA agents struck their vehicle in eastern Yemen. Sanaa has admitted cooperating with Washington in the attack.
"The military wing of al-Qaida in Yemen - the Abu Ali al-Harthi Brigades - has for a year been preparing to carry out a devastating strike," the group warned, according to al-Sahwa.
The group also warned of an "impending major strike in America," adding that the attacks on the Cole and the Limburg had been in revenge for the killing of Islamist leaders in Yemen.
Yemen has been engaged in a crackdown on suspected members of al-Qaida since the 11 September 2001 attacks in the United States for which bin Ladin's organization was blamed, but its government denies that there is such a thing as a Yemeni branch of Al-Qaida.