However, while Ali Larayedh said he was ready to step aside for a caretaker cabinet to hold new elections, he said he would not create a power vacuum while the country faced serious security and economic challenges.
The Prime Minister had earlier revealed Tunis had proof Ansar al Sharia had assassinated two secular politicians and killed eight soldiers in recent months.
Speaking amid speculation about the future of democracy in the birthplace of the Arab Spring revolts, Mr Larayedh said the drafting of a new constitution must be finished and all parties must agree on the election plan before he stepped down.
"We are not playing politics with the security of the country," he said, anticipating the reaction that promptly came from opposition critics who have long accused his Islamist Ennahda party of being lax with Muslim radicals.
Referring to a stalemate paralysing Tunisian politics since the second assassination this year and the killing of eight soldiers near the Algerian border, both in July, he said: "I am ready to step down if that can resolve the problem.
"However, we think a caretaker government would not be the best solution in this critical phase on the security and economic fronts. The government has to continue to work in a disciplined way until a consensus is achieved."
Tunisia, struggling to save its nascent democracy amid popular discontent, has witnessed mounting pressure on the unpopular Ennahda party to step aside for new polls.
Rached Ghannouchi, the party chairman who shapes policy from outside the government, has agreed to negotiate with the opposition under the mediation of the powerful UGTT trade union federation but not revealed many details of his position.
Mr Larayedh spelled out the government's four-point response to opposition demands that it quit immediately. He said his cabinet should stay in office to maintain state authority at the start of the transition.
The assembly elected in 2011 to write a new constitution should promptly resume its work, which was suspended in late July, and finish the document by October 23, he said.
Tunisia's President Moncef Marzouki should consult all parties in search of a consensus on a caretaker government that can organise and hold free elections under the surveillance of international observers.
Mr Larayedh said the reclassification of Ansar al Sharia, whose main leaders have been sought for violent acts since December, would bar other members from holding meetings, preaching and agitating for sharia law as they have been able to do until now.
Ansar leader Saifallah Benahssine, who is also known as Abu Iyadh, is a former al Qaeda fighter in Afghanistan being sought by Tunisian police for allegedly inciting an attack on the US embassy in Tunis in September 2012.
Four people were killed in those disturbances, which began as a protest over a film that mocked the Prophet Mohammad.
Ansar al-Sharia is the most radical Islamist group to emerge in Tunisia since secular autocrat Zine al-Abidine Ben Ali was toppled in 2011 in the first of the Arab Spring revolts.
It was the prime suspect after the assassinations of leftist secular leaders Chokri Belaid in February and Mohamed Brahmi in July, which police said were carried out with the same gun.
It was also suspected in the killing of eight soldiers in the rugged Mount Chaambi area near the Algerian border in July.