Under the plan, rebel-held eastern Aleppo would remain under opposition control if rebel fighters withdrew.
Foreign Minister Walid al-Muallem, who met the UN envoy to Syria on Sunday,  called the idea a violation of "national sovereignty".
Earlier, eight children died in government-held western Aleppo after rebels hit a school, state media say.
In a rebel-held area, a barrel bomb killed a family of six, activists say.
Local medics say the victims in the al-Sakhour district suffocated to death because the bomb was laced with chlorine gas.
The UK-based Syrian Observatory of Human Rights, which monitors all the latest developments in Syria, reported the bombing but could not confirm the gas was used.
In Sunday's rebel shelling of the school in the government-controlled Furqan area, a teacher was also killed and at least 32 people were injured, Syria's state-run Sana news agency reports.
Mr Muallem rejected the truce plan during Sunday's meeting in Damascus with UN envoy Staffan De Mistura.
Mr De Mistura suggested the government grant autonomy and recognise the local administration in rebel-held areas of Aleppo if jihadist fighters left the city.
But Mr Muallem said the state's institutions must be restored across the whole city because it was a matter of "national sovereignty".
"It is not acceptable at all to leave some 275,000 of our people as hostages to 6,000 or 7,000 gunmen. There is no government in the world that would accept that," the Syrian minister said.
Mr De Mistura warned earlier this week that the government was chasing a "pyrrhic victory" in Aleppo if it does not arrive at a political settlement with the opposition.
Mr De Mistura arrived in the country amid growing concern for the residents of east Aleppo. The World Health Organization says they are almost entirely without hospital facilities following the government's latest assault.
According to the UK-based Syrian Observatory of Human Rights, at least 103 people have died in rebel-controlled areas since the bombardment began on Tuesday, following a three-week moratorium.
Syria Civil Defence, a volunteer rescue service also known as the White Helmets, said there were 180 air strikes on east Aleppo on Saturday alone.
A UN proposal to end heavy fighting in the city of Aleppo has been rejected by the Syrian government.