The International Red Cross on Wednesday said it was suspending its efforts since the rebels and the Indonesian military failed to reach an agreement.

"As of today the Indonesian Red Cross and the International Committee of the Red Cross have suspended our involvement until both sides in the conflict reach an agreement," Red Cross spokesman Fortuna Alvariza said.

The suspension is a setback to hopes for early release of the captives being held in East Aceh for months.

The rebels of the Free Aceh Movement (GAM) insist they will release 80 civilians if the military grants a two-day ceasefire.

Stalemate

The government rejected the ceasefire proposal and accused the rebels of holding 277 people captive. 

Alvariza said the Red Cross was not involved in the negotiations and only acted as a mediator.

"Our job was to facilitate the exchange of messages but we saw that both sides could not reach common ground," she said.

The hostages being held include a television cameraman and the wives of two military officers.

The hostage-crisis erupted amid Jakarta's renewed military campaign against the rebels who are seeking Aceh's independence.

An estimated 1300 rebels have been killed during the current offensive launched in May.

Aceh on the northern tip of Sumatra island has periodically been racked by violence since the struggle for its independence first erupted in 1976.