BOGOTA (Reuters) - Colombia's most-feared death squad condemned on Friday the recent peace proposal of its Marxist rebel enemies as a recipe for the break-up of the state and tantamount to an open declaration of war.

The ultra-right Peasant Self-Defence Force of Cordoba and Uraba (ACCU) said it would continue to attack the guerrillas even inside those areas set to be demilitarized for full-fledged peace talks later this year.

The National Liberation Army (ELN), Colombia's second largest rebel group, hosted a three-day meeting in Germany this week in which it lay the foundations for a negotiated solution to the country's long-running civil conflict.

But guerrilla leaders made clear they would not lay down their arms any time soon and aimed to hold on to power in their zones of influence even after an eventual peace deal.

"We interpret the proposal (of the ELN) as a declaration of war because it aims to fragment the state," the ACCU, led by paramilitary chieftain Carlos Castano, said in a statement.

"You hope that the armed forces will protect you from us by setting up a demilitarized zone. But nobody will prevent us from attacking your territories," added the statement, a copy of which was obtained by Reuters.

This week's meeting in Wuerzburg, Germany, between the Cuban-inspired ELN and Colombian business, labor and religious leaders fueled hopes that an end may be in sight to the country's three-decade-old civil conflict.

The ELN pledged to take steps to protect civilians from the effects of the conflict, which has claimed more than 35,000 lives in the last 10 years alone.

The guerrillas and civic leaders agreed to meet in an undisclosed location in Colombia in October to formally launch the peace process. They called on the armed forces to temporarily withdraw from the area to allow a so-called "national convention" to take place safely.

The ELN also pledged to hold direct talks with president- elect Andres Pastrana soon after he takes office on Aug. 7.

But the latest paramilitary threats drew an angry reaction from ELN chieftains and seem certain to dent the growing political optimism.

"This is a great provocation to the political process," Milton Hernandez, a member of the ELN's national directorate present at the Wuerzburg meeting, told Reuters by phone.

"The paramilitaries have fallen into a political vacuum because they lack political proposals and they can only issue this declaration of war which is not just against us but against the whole country," he added.

The ACCU threats appear to have been specifically motivated by ELN commander Pablo Beltran's comments in Germany that the ELN would continue to be "the authority and state in its sphere of influence" even after a peace pact was signed, suggesting the ELN wanted self-governing rebel enclaves.

Government officials and political analysts say the guerrillas will inevitably have to be allowed a power-sharing role at least at a local level.

Colombia's right-wing paramilitary gangs have been blamed for a growing number of massacres of unarmed civilians and suspected leftist sympathisers. International human rights groups have accused the armed forces of giving tacit backing and in some cases open support to the illegal groups.