Syria has been ruled with an iron grip by the Assad family for 40 years but has now been reached by the wave of popular demonstrations that have swept the Middle East.
In a highly anticipated address to parliament that lasted almost an hour, Assad warned that Syria's "enemies" were targeting its unity.
He failed to deliver the expected announcement that he was ending the 48-year-old emergency, prompting rights groups to express disappointment.
Washington said the speech lacked substance, and two senior US lawmakers urged President Barack Obama to get behind the opposition to Assad.
Following the speech, gunfire broke out in the Syrian port city of Latakia, with conflicting reports as to what was happening.
Syria's emergency laws authorise the arrest and interrogation of any individual and restrict gatherings and movement.
Key Assad aide Buthaina Shaaban had told AFP on Sunday that the government intended to lift the state of emergency, but she could not say when.
Assad, who appeared relaxed and exchanged jokes with parliamentarians, echoed that statement on Wednesday, saying that talks were underway on new laws on the media and political pluralism.
"The emergency law and political parties law have been under study for a year.
"There are more, unannounced reforms ... but giving a timeframe is a logistic matter. When we announce it in such circumstances, it is difficult to meet that deadline."
The president warned that Syria was going through a "test of unity". Its foes had taken advantage of the needs of the people to incite division, he said.
"This conspiracy is different in shape and timing from what is going on in the Arab world," he said. "Syria is not isolated from the region... but we are not a copy of other countries."
While acknowledging that the Syrian people had legitimate demands, Assad warned that people's desires had been used to "trick them into heading to the streets."
"We are all for reform. That is the duty of the state. But we are not for strife," Assad said.
"What we should watch out for is starting reforms under these circumstances right now, this passing wave."
But Amnesty International said Assad had "missed a crucial opportunity" to lift the emergency laws.
Pinning the blame on a foreign "conspiracy" was a "dangerous diversion" Philip Luther, Amnesty's Middle East and North Africa deputy director, said.
Nadim Houry, senior researcher at Human Rights Watch, described the speech as "extremely disappointing."
"President Assad simply repeated the same vague promises of reform that he?s been uttering for over a decade," Houry told AFP.
US State Department spokesman Mark Toner said Assad's speech "fell short."
"It's clear to us that it didn't have much substance to it," Toner said, adding that he thought the Syrian people would be disappointed.
Republican Senator John McCain and Independent Senator Joe Lieberman said Obama's effort to engage rather than shun Damascus had "little to show for it".
Now it was time to back protesters against Assad's rule, they said.
Gunfire broke out in the port city following Assad's speech, with state television blaming "armed men" for opening fire in the southern neighbourhood of Sleibi.
City residents reported a drive-by shooting at a sit-in, while another eyewitness, contacted by telephone, said security forces had opened fire to disperse demonstrators disappointed by Assad's speech.
Syrian human rights activists have accused security forces of killing 130 people in their crackdown on the two weeks of protests. Officials put the toll at some 30 dead.
It is a period of unprecedented domestic pressure for Assad, who succeeded his father Hafez in 2000.
Demonstrators have defied the state of emergency with street gatherings, emboldened by the wave of dissent that has rocked the Arab world since December.
The protests were quickly contained in Damascus, but took root in the tribal region of Daraa, south of the capital, and in the confessionally divided city of Latakia on the Mediterranean coast.
The government of Prime Minister Mohammed Naji Otri tendered its resignation on Tuesday and a new cabinet is expected to be announced by the end of the week.
Facebook group The Syria Revolution 2011, an anonymous yet wildly popular page, has called for nationwide demonstrations on Friday.