Indonesian chief security minister Widodo Adi Sutjipto told reporters in Jakarta the government stance was still "firm".
A fifth round of talks between the government and the Free Aceh Movement (GAM) is taking place this week in Helsinki to seek a deal to end their 30-year old conflict in Aceh, which has taken more than 12,000 lives, mostly of civilians.
GAM has agreed to drop its fight for an independent Acehnese state but demands Jakarta allows it to take part in local elections, that can start later this year, as an official party.
Jakarta officials say that would force changes to national electoral laws and entice other sectarian groups in the multi-ethnic country to follow suit.
Under existing laws, all Indonesian parties must have a headquarters in Jakarta and branches in more than half the country's 33 provinces.
"I think the position of the government is clear that a local political party cannot be accommodated because there are existing rules on political parties and they stand as the national political system," said Widodo, a former military commander.
A senior commander in GAM's military wing told Jakarta-based Radio Elshinta in an interview the demand for a political party "must be part of the negotiation process" but guerrillas would obey whatever the group's Stockholm-based political leaders decide in this week's talks.
"Whether it is disbandment or continuance, we leave everything to the leadership," Sofyan Dawood said.
An agreement this week could mean a final truce would be signed in August.
- Reuters - Thomson Reuters Foundation
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