The decree issued earlier by President Ashraf Ghani had raised hopes that Kabul's offer to free 1,500 insurgents as a "gesture of goodwill" before talks begin, would prompt the Taliban to come to the negotiating table.
But Taliban political spokesman Suhail Shaheen told AFP that "5,000 prisoners should be released as a trust-building measure, and [...] this should be before the intra-Afghan talks", refusing to budge from a longstanding demand of the insurgents.
Any changes amounted to "a violation" of the deal struck between the insurgents and Washington in Doha last month, he added.
Even though Kabul was not a signatory to the deal, that accord stated that up to 5,000 Taliban prisoners held by Afghan authorities "will be" released before talks, prompting an angry reaction from Ghani.
Ghani's decree said the government would release 1,500 captives starting Saturday – but only if the insurgents cut violence – with plans to free another 3,500 prisoners after negotiations begin.
It was an attempt to resolve one of the long-running spats that has stymied peace talks between the insurgents and the Afghan government.
The Taliban announcement throws everything into doubt again, and each day of delay to negotiations brings more bloodshed, with the insurgents carrying out dozens of attacks across the country.
On Wednesday, the government warned it would resume offensive operations against the militants next week if violence continues, ending a unilateral partial truce put in place ahead of the talks.
"The failure of this process will be on the Taliban," Ghani's spokesman Sediq Sediqqi said, adding: "We have taken necessary political steps but the other side still insists on violence."
"Our forces are on active defense status but starting from next week if the Taliban keep violence on, we will retaliate," he warned. In Afghanistan, the new week starts on Saturday.
Ghani's decree had signal led a softening of his stance, with the provision that none of the released prisoners would return to the frontlines.
The U.S. negotiator Zalmay Khalilzad welcomed the decree and urged the Afghan government and the Taliban to meet "immediately" in Qatar to sort out prisoner details.
Analyst Michael Kugelman from the Wilson Center think-tank said the prisoner dispute offered an early glimpse of the challenges facing Afghan government negotiators and U.S. mediators.
"The Taliban are playing hardball here because they have a lot of leverage," Kugelman told AFP.
"They are in no hurry to make the peace process work because they know they are winning on the battlefield," he said. "They can simply walk out if necessary."
The insurgents already control large swathes of Afghanistan and have repeatedly referred to Ghani's government as a U.S. puppet regime.
The political chaos in Kabul has complicated matters further, with Ghani's former chief executive Abdullah Abdullah also claiming the presidency following last September's election, which was marred by delays and allegations of voter fraud.
On Monday, Abdullah swore himself in as president minutes after Ghani took the oath of office. The row deepened Wednesday, with Ghani dissolving the office of chief executive and Abdullah in turn dismissing Ghani's decree as "invalid."
The decree was issued hours after the U.S. said its forces had started pulling out of two bases in Afghanistan, in line with their agreement to withdraw from the country within 14 months in exchange for Taliban security guarantees.