Ali Abdullah Saleh's offer to negotiate with members of the terror network came as officials said that several al-Qa'ida operatives, including Saudis and Egyptians, were travelling from Afghanistan to join fighters in the lawless tribal lands in central and southern Yemen.
It came as US President Barack Obama said in a magazine interview that he would not be sending troops to Yemen, which is quickly emerging as a new front in the war on terror, nor Somalia.
Among those said to be in hiding in South Yemen is influential Yemeni preacher Anwar al-Awlaki. The US-born imam preached to two of the September 11 bombers in California and had links to the US army psychiatrist charged with the Fort Hood gun rampage and the Nigerian man who allegedly tried to blow up a Christmas Day flight to Detroit.
Some Yemeni officials believe that Mr al-Awlaki, a member of a powerful clan who claims not to be a direct member of al-Qa'ida, may be willing to enter talks.
A slim, bearded and bespectacled 38-year-old former civil engineer who was born in New Mexico to a Yemeni father, Mr al-Awlaki is an imam whose fluency in English and command of internet communications have made him a top recruiter for disfranchised young Muslims in the West. Dozens of Mr al-Awlaki's speeches can be found on the YouTube website, referring to everything from Koranic parables to the rapper Snoop Dogg and zombies.
While serving as a preacher in San Diego in 2000, his sermons were attended by two of the men who participated in the September 11 attacks - Nawaf al-Hazmi and Khalid al-Mihdhar - and he became a spiritual adviser to the hijackers.
He later exchanged emails with Nidal Hasan Malik, the US army major accused of killing 13 soldiers in a shooting spree on the military base of Fort Hood in November last year.
Yemeni officials believe that he met Umar Farouk Abdulmuttalab, the Nigerian accused of trying last month to bring down a flight with explosives hidden in his underwear.
Mr Saleh told Arabic television news that he was willing to offer al-Qa'ida militants a last chance to put down their weapons and come to an accommodation, even as US special forces instructors put troops through intensive anti-terrorist training.
Mr Saleh said: "If al-Qa'ida lay down their arms, renounce terrorism and return to wisdom, we are prepared to deal with them.
"They are a threat not only to Yemen but also to international peace and security."
Mr Obama said he had "no intention" of sending US troops to fight militants in Yemen and Somalia.