In what appeared to be part of a clever political gambit by Mr Zedillo, the controversial governor of Chiapas, Eduardo Robledo, also said he would resign. The Zapatistas, whom the Mexican army began hunting last week, had demanded the resignation of Mr Robledo, a longtime member of Mr Zedillo's ruling Institutional Revolutionary Party (PRI), saying he won the governorship last August through massive fraud.
His resignation was a big concession to the rebels. But it also allowed Mr Zedillo to undercut the guerrillas by saying they should now lay down their arms. The government still wanted a political rather than military solution to the Chiapas conflict, he said in Mexico City.
There was little doubt Mr Zedillo's announcement and Mr Robledo's resignation were part of a plan to force the guerrillas to the negotiating table while restoring the President's image as a man of dialogue rather than military solutions. Mr Zedillo clearly feels the recapture of formerly rebel-held territory over the last five days - except for guerrilla retreats in the hills and jungle - has given him back the upper hand.
The President had come under heavy criticism over the last five days as the army sealed off the conflict zone and imposed a news blackout while the rebels spoke of bombardments, torture and rape of civilians.
Shortly after the governor's announcement in the Chiapas state capital, Tuxtla Gutierrez, Mr Zedillo said he had ordered the army to halt its offensive to allow a negotiated solution. He said he would offer the Zapatistas amnesty, if they give up their arms, under a new law he would send to the Mexican congress today. His statement did not specify whether amnesty would cover the masked guerrilla leader, Subcomandante Marcos, and other rebel chiefs.
Performing a complete about-turn on his efforts at dialogue, Mr Zedillo ordered their arrest last Thursday and sent the army and anti-narcotics agents to Chiapas to retake rebel-held territory on the edge of the Lacandon jungle.
There was no immediate response from Marcos or his Zapatista National Liberation Army (EZLN). Sources close to the Bishop of San Cristobal de las Casas, Samuel Ruiz, who has mediated in the conflict and identified with the guerrillas' cause though not its use of arms, reacted with caution. "It's a political manoeuvre but we'll have to see where it leads," a Church source said.
The "rebel governor" of Chiapas, Amado Avendano, who also backs the rebels' demands, and ran against Mr Robledo last August, described the proposed resignation as "a political manoeuvre but it's a first step. We've won a part of what we were asking for but if they replace him with another PRI member, everything will be the same. The army must return to their barracks as the next step."