Syria was at a "turning point" after "difficult days," the president said in a televised speech at Damascus University, vowing the country would emerge stronger in the face of the "plotting" against it.
He said a "national dialogue" was underway that could lead to a new constitution and raised the possibility of elections and an end to the ruling Baath party's dominance, while warning the economy was on the verge of collapse.
Offering his condolences to the families of "martyrs" from the unrest rocking the country since mid-March, Assad said there could be "no development without stability, no reform in the face of sabotage and chaos."
"We make a distinction between those (with legitimate grievances) and the saboteurs who represent a small group which has tried to exploit the goodwill of the Syrian people for its own ends," said Assad.
The Syrian leader's third speech to the nation since the protests broke out, punctuated by applause from the invited audience, was buoyed by a Russian pledge to block Western moves against him at the United Nations.
Western leaders, meanwhile, have been pushing for concrete measures towards reform in Syria.