In his third address to the nation since protests began in March, he said Syria should deal with people's demands for reform but that a "small faction" was exploiting popular grievances.
He said a national dialogue would shape Syria's future and urged people who had fled to Turkey to return.
After the speech there were reports of further protests in several cities.
Local co-ordinators for the protesters said reforms were no longer their demand. The only solution was a change of regime, their spokesman Ali Othman told the BBC.
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Jim Muir BBC News President Assad's latest speech is unlikely to change the course of the country's history. It was essentially an update on the second address he gave, on 16 April, in which he gave his new cabinet ministers their marching orders with the emphasis on political and economic reforms.
His new speech was greeted with immediate scepticism by activists and protesters, who took to the streets in several towns to declare their "revolution" would continue.
If there was one tangible new gesture, it came with Mr Assad's statement that he had asked the justice ministry to expand the scope of the qualified amnesty issued on 31 May.
But for much of his speech, he dwelt on his "absolute conviction" about the reform process and the national dialogue that he said must underpin it.
Other opposition activists said Mr Assad's speech was addressed to his loyalists - not to his opponents.Protesters complained that there was no announcement on ending the violence, nor was there any mention of holding the security services accountable for the crackdown, the BBC's Lina Sinjab in Damascus reports.
But Mr Assad's supporters said the speech was encouraging and responsive to people's demands.
Syrian government spokeswoman Bouthaina Shaaban told the BBC that the majority of Syrians "consider that today is a new dawn for the future of Syria".
Rights groups say at least 1,300 civilians have been killed in demonstrations since March, and more than 300 soldiers and police.
The speech comes as European Union foreign ministers meeting in Brussels warned of further sanctions against Syria.
A statement said the sanctions would be aimed at achieving "a fundamental change of policy by the Syrian leadership without delay".
Meanwhile, the US said it wanted to see "action, not words" on the reforms pledged by Mr Assad.
Turkish President Abdullah Gul said the speech was "not enough".
"Assad should clearly and precisely say: 'Everything has changed. We're transforming the system into a multi-party one. Everything will be organised according to the Syrian's people will, and I will be carrying out this process,'" he told journalists in Ankara.
"As soon as the Syrian president says that he will lead the transition in his country, we will see that things will change."
'Vandalism' Speaking in a televised address to supporters at Damascus University on Monday, Mr Assad expressed regret about the protest deaths, saying that they were a great loss to the nation and him personally.But he said the "saboteurs", who had smeared the image of Syria across the world during the protests, had to be isolated.
"What is happening today has nothing to do with reform, it has to do with vandalism," he said.
"The demands of the street do not justify inflicting damage on the country."
Mr Assad also said a national dialogue authority was being set up to create a reform plan, and another committee would be created to examine the constitution.
"We must give this dialogue a chance because the future of Syria depends on it," he said, adding that he expected a reform package by September.
He said he had instructed the justice minister to consider expanding a recent amnesty.
Continue reading the main story 30 March: In address to parliament, described unrest as conspiracy against Syria by its foreign enemies16 April: In TV address, announces end to emergency law, expresses sadness over deaths and calls for national dialogueMr Assad also urged thousands of people who had fled into Turkey to return to their homes "as soon as possible".He referred in particular to the residents of Jisr al-Shughour, where armed forces recently took control after violence in which more than 100 security personnel were killed.
"The state will protect them," he said.
President Assad's latest speech came a day after opposition activists announced the creation of a body to lead the protests.
The council urged people to "co-operate in all cities and provinces of Syria to achieve the legitimate goal of overthrowing the regime", according to AFP news agency.
More than 10,000 Syrian refugees have crossed the Turkish border, and Ankara says another 10,000 are sheltering on the Syrian side.
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