MANAGUA, NICARAGUA, MARCH 2 -- In a surprise move, President Daniel Ortega tonight proposed direct, top-level cease-fire negotiations with the U.S.-backed rebels, without any mediator present and to be held inside Nicaraguan territory.

Ortega informed Cardinal Miguel Obando y Bravo that his role as mediator had ended, and he named Defense Minister Gen. Humberto Ortega, his brother, to head the government delegation for a new round of cease-fire talks that the president suggested should take place March 9-11 in Sapoa, three miles north of the border with Costa Rica in southwestern Nicaragua.

In Miami, a spokesman for the rebels, Bosco Matamoros, said they were "shocked" by the Sandinista proposal and would have no immediate response. But Matamoros said, "The Sandinistas were very uncomfortable with the presense of the cardinal. Their purpose is to withdraw from the negotiations the only witness who is credible to the whole Nicaraguan nation."

Ortega's initiative, coming on the eve of an expected vote in the U.S. Congress on nonlethal aid for the rebels, known as contras, marked the first time that the leftist Sandinista government had agreed to meet face to face with the contras' highest leaders on Nicaraguan soil.

Previously the Sandinistas had refused to hold the talks in Nicaragua, demanding that the rebels accept a government amnesty before being able to enter the country.

The proposal also conferred new legitimacy on the contras as a counterpart in negotiations.

"We are doing our maximum," Ortega said.

The president's announcement came after a 10-day exchange of sharply worded letters between Ortega and the cardinal in which the government rejected a cease-fire proposal by Obando that could have introduced political topics into the talks.

Ortega made his announcement on the steps of the offices of the archdiocese of Managua after a brief meeting with Obando.

The government has insisted that the negotiations, begun under the terms of a regional peace accord, be limited to technical discussions to arrange a cease-fire as a way for the contras to lay down their arms and return to political life. Ortega indicated tonight the government will stick to that agenda.

The government expects the contras to respond by sending at least one of the five top directors of the Nicaraguan Resistance, the contra alliance, to the new round of talks, Ortega said.

The contras have called for broad political reforms in Nicaragua before they renounce the fighting or agree to a cease-fire.

Ortega thanked Obando for his "indispensable contribution" in bringing together the two warring sides in the first phase of the cease-fire negotiations, which began last Nov. 5. He asked the cardinal, in his last act as mediator, to communicate the government's new offer to the contras.

"His mediation was necessary when the conditions did not yet exist for direct discussions," Ortega said. The Nicaraguan Resistance had strongly supported the cardinal as mediator.

In a letter he released this morning, Obando criticized the government's performance during a failed round of talks Feb. 18 and 19 in Guatemala City. But he reiterated his willingness to continue to mediate.

The government delegation will include Sandinista Army Chief of Staff Gen. Joaquin Cuadra, Ortega said. Deputy Foreign Minister Victor Hugo Tinoco will continue to be a member.

Referring to bills under consideration in the U.S. Congress, Ortega said both the Republican and Democratic versions show a "complete lack of respect for international laws."

Moments after Ortega left his offices Obando accepted the president's decision with resignation and said, "As soon as one side says we no longer need the services of the mediator, he can no longer mediate."

But Obando curtly declined an invitation by Ortega to inaugurate the Sapoa sessions. Although he picked his words carefully, Obando made clear his doubts that the new talks will produce results.

"To be honest, I never thought these talks would succeed right away. I thought it would be very difficult at this time to settle only for a halt to military hostilities."