Basque newspaper Gara on Saturday reported that Eta sent it a communique saying its decision was motivated by recent "political changes".
In May, Spain's Socialist government said it would talk to Eta, which has been blamed for killing about 850 people in a four-decade independence campaign, if it laid down its arms.
"The government considers it totally unacceptable that Eta discriminates or chooses its criminal targets," a government source said in reaction to Eta's announcement.
Eta, which once tried to kill former prime minister Jose Maria Aznar, called a ceasefire in September 1998 but rescinded it in December 1999. It started killing again early the following year and since then has killed about 10 politicians, the last in 2002.
The government's peace overtures angered the main opposition Popular party and many Spaniards and a so-called anti-terrorist pact between the Socialists and Popular party has dissolved.
"The government considers it totally unacceptable that Eta discriminates or chooses its criminal targets"
Eta said that was one of the motives for its decision, effective 1 June.
"I think they are trying to divide and confuse. They reckon they can be more effective if they only have to deal with the Socialists," Charles Powell, professor at San Pablo-CEU University, said. "This will deepen the rift."
The group, which has been weakened in recent years by dozens of arrests of alleged leaders and other members, wants a Basque homeland carved out of northern Spain and southwest France.
Eta, which has not killed anyone for two years but has claimed nine recent attacks, said it was now up to Madrid and Paris to "respond positively to the will displayed by Eta in recent months".
Socialist leader in the Basque Country Patxi Lopez condemned the announcement: "What about the businessmen, the judges, the security forces, the teachers, all those who don't share their views, who remain in the eye of the terrorist's group?"
Since 2000, Eta has killed 10
politicians, the last in 2002
The announcement came a day after Eta called for talks in a letter printed in the same newspaper. The government dismissed the call, saying it would not comment until Eta announces the end of violence.
Eta also called for talks in April, after months of speculation that a ceasefire was on the way. But Arnaldo Otegi, leader of Batasuna, a party banned as Eta's political wing, has said that if the group stops violence authorities would just ignore the Basque issue.