Spanish prime minister Jose Luis Rodriguez Zapatero has suspended dialogue with ETA after a bomb wrecked a car park at Madrid's international airport, breaking a nine-month truce.
At least 19 people were injured in the attack and rescuers were still searching for two missing people.
"I have decided to suspend all initiatives for dialogue with ETA," Mr Zapatero told a news conference, effectively ending a peace process he announced in June to end ETA's four-decade armed struggle for independence of the northern Basque Country.
"There can be no dialogue with violence," he said.
The explosion brought down several concrete floors of the multi-storey car park yesterday morning, an hour after the first of three telephone warnings of an attack at Barajas Airport's ultra-modern Terminal Four, officials said.
The attack took place on a day Barajas airport was crowded with holiday travellers but they were not evacuated until after the blast filled the departure hall with smoke, causing panic.
ETA, which killed more than 800 people in its 40-year campaign but had been weakened by hundreds of arrests in recent years, declared a permanent ceasefire in March. ETA's last killings were more than three years ago, but that could change if two people reported missing have died in the blast. Rescuers searched the rubble for the two people, including a man taking a nap in his car while his girlfriend went to meet a passenger.
But ETA's political ally Batasuna, which is banned for its links to the guerrillas, said the bombing did not mean the search for an end to the conflict was over. "The peace process ... is not only not over, but now it is more necessary than ever," Batasuna leader Arnaldo Otegi told a news conference in the Basque city of San Sebastian.
Expressing sympathy for those injured, Mr Otegi blamed the attack on the government's failure to make concessions to ETA, such as the conditions of its members in jail.
Officials received three telephoned warnings about a bomb in a purple Renault Traffic van in the hour before the explosion, one of them claiming responsibility for ETA. Police cordoned off the car park area before the bomb blew up, sending a huge pall of smoke over the airport terminal.
Stranded passengers were hurried out on to the airport runway. Terminal Four suspended all flights for several hours.