"A new process has started, it is as important as the creation of the republic (in 1923) by Mustafa Kemal Ataturk," Ocalan told his lawyers in his latest meeting with them at the Imrali prison in northwest Turkey, the Firat news agency said.

His lawyers regularly meet him at the prison where he has been serving a life prison term imposed in 1999 for treason.

Ocalan, historic leader of the banned Kurdistan Workers Party (PKK), said that the Turkish republic "is going to become more democratic."

He called on the Turkish state to "recognise the rights of Kurds to become a democratic nation."

Ocalan was quoted as saying that the Kurds would recognise the Turkish state. He also confirmed that he had given up his secessionist claims.

"In the past I believed that everything would be solved if we created a state... Now I reject a federation like the one in Iraq," he was quoted as saying by Firat, which is considered close to the PKK.

Iraqi Kurdistan, in northern Iraq and just across the border from Turkey, is virtually autonomous from the government in Baghdad. Most PKK rebels live in mountain camps in Iraqi Kurdistan.

Ocalan had planned to release his peace plan on August 15, the anniversary of the launch of the PKK's separatist conflict against the Turkish state in 1984. More than 40,000 people have been killed since then.

But the announcement was delayed and is now not expected until later this week. His lawyers said he has not yet completed the document.

The Turkish government has also announced its own plan to try to end the conflict, concentrated in the southeast of the country. But Prime Minister Recep Tayyip Erdogan's plan remains vague. He has spoken only of the "possibility of a better understanding in the medium and long term."

Observers say that the government measures concern mainly the cultural rights of the 12 million Kurds and would add to efforts already made since 2001 which Turkey hopes will bolster its chances of joining the European Union.