Moscow responded by accusing the separatists of stalling the peace process, continuing the mutual recriminations which have all but stalled peace moves 10 months after the Kremlin sent troops to halt the north Caucasus region's independence drive.
Separatist Chechen leader Dzhokhar Dudayev issued a statement accusing the Russians of attacking civilians.
"The participation of the Chechen side in talks is suspended until the arrival of international observers and security forces of the United Nations to guarantee observation of international norms," he said.
The rebels have called before for UN peacekeepers to be sent to the region but the appeals have been ignored.
Dudayev's chief negotiator in the Chechen capital Grozny, Khozhakhmed Yerikhanov, later told Interfax that the rebels would also suspend moves to hand in their weapons under the terms of an agreement signed on July 30.
They would start handing in their weapons again only when Russian authorities identified and punished troops who he said were responsible for recent attacks on two Chechen villages.
The Organization for Security and Cooperation in Europe is the only international group mediating in Chechnya and it has only a small mission there.
A representative in Moscow said the OSCE was considering cutting, not increasing, its six-strong mission because of the recent violence in the republic.
Moscow regards the Chechnya crisis as an internal affair and although it welcomed the OSCE mission, it appears unlikely to welcome any other observers.
Dudayev's move to suspend talks was the latest step backwards in the peace process, which has made little progress since a shaky cease-fire came into force under the July 30 pact.
Russia on Monday suspended the withdrawal of most of its troops in response to a bomb attack Friday which injured its top commander in the region, Lieutenant General Anatoly Romanov.
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