Sharaa, a Sunni Muslim in a power structure dominated by Assad's Alawite minority, has rarely been seen since the Syrian revolt erupted in March 2011 and is not part of the president's inner circle directing the fight against Sunni rebels.
But he is the most prominent figure to say in public that Assad will not win. He was speaking to the pro-Assad al-Akhbar paper in an interview from Damascus which is now hemmed in by rebel fighters to the south.
Assad's forces have used jets and artillery to try to dislodge the fighters from around Damascus but the violence has crept into the heart of the capital and rebels announced on Sunday a new offensive in the central province of Hama.
Sharaa said the situation in Syria, where more than 40,000 people have been killed, was deteriorating and a "historic settlement" was needed to end the conflict, involving regional powers and the U.N. Security Council and the formation of a national unity government "with broad powers".
"With every passing day the political and military solutions are becoming more distant. We should be in a position defending the existence of Syria. We are not in a battle for an individual or a regime," Sharaa was quoted as saying.
"The opposition cannot decisively settle the battle and what the security forces and army units are doing will not achieve a decisive settlement," he told the paper, adding that the insurgents fighting to topple Syria's leadership could plunge it into "anarchy and an unending spiral of violence".
Sources close to the Syrian government say Sharaa had pushed for dialogue with the opposition and objected to the military response to an uprising that began peacefully.
In Damascus, residents said on Monday the army had told people to evacuate the Palestinian district of Yarmouk, suggesting an all-out military offensive on the southern district was imminent.
The centre of the city, largely insulated from the violence for 21 months, is now full of army and vigilante checkpoints and shakes to the sound of regular shelling, residents say.
Queues for bread form at bakeries hours before dawn, as people seek out dwindling supplies, power cuts are increasing and fears are growing that Damascus could descend into chaos.
In a veiled criticism of the crackdown, Sharaa said there was a difference between the state's duty to provide security to its citizens, and "pursuing a security solution to the crisis."
He said even Assad could not be certain where events in Syria were leading, but that anyone who met him would hear that "this is a long struggle...and he does not hide his desire to settle matters militarily to reach a final solution."
"We realise today that change is inevitable," Sharaa said, but "none of the peaceful or armed opposition groups with their known foreign links can call themselves the sole legitimate representative of the Syrian people".
"Likewise the current leadership...cannot achieve change alone after two years of crisis without new partners who contribute to preserving (Syria's) national fabric, territorial unity and regional sovereignty".
Rebels have now brought the war to the capital, without yet delivering a fatal blow to the government. But nor has Assad found the military muscle to oust his opponents from the city.
In Paris, Foreign Minister Laurent Fabius of France, one of the powers most insistent that Assad has lost his legitimacy, said: "I think the end is nearing for Bashar al-Assad."
On the ground, rebels said they were launching an operation to seize the central province of Hama to try to link northern rural areas of Syria under their control to the centre.
Qassem Saadeddine, a member of the newly established rebel military command, said fighters had been ordered to surround and attack checkpoints across the province. He said forces loyal to Assad had been given 48 hours to surrender or be killed.
"When we liberate the countryside of Hama province ... then we will have the area between Aleppo and Hama liberated and open for us," he told Reuters.
The city of Hama in the province of the same name has a special resonance for anti-Assad activists. In 1982 Hafez al-Assad, father of the current ruler, crushed an uprising in the city, killing up to 30,000 civilians.
In Damascus, activists said fighter jets bombed the Yarmouk Palestinian refugee camp on Sunday, killing at least 25 people sheltering in a mosque.
The attack was part of a month-old campaign by Assad's forces to eject rebels from positions they are establishing around the capital's perimeter. Yarmouk, to the south, falls within an arc of territory running from the east of Damascus to the southwest from where rebels hope to storm the government's main redoubt.
Opposition activists said the deaths in Yarmouk, to which refugees have fled from fighting in nearby suburbs, resulted from a rocket fired from a warplane hitting the mosque.
Footage showed bodies and body parts scattered on the stairs of what appeared to be the mosque.
The latest battlefield accounts could not be independently verified due to tight restrictions on media access to Syria.
Syria is home to more that 500,000 Palestinian refugees, most living in Yarmouk, and both Assad's government and the rebels have enlisted and armed Palestinians as the uprising, which began as a peaceful street movement 21 months ago, has mushroomed into a civil war.
After Sunday's air raid, clashes flared between Palestinians from the pro-Assad Popular Front for the Liberation of Palestine-General Command (PFLP-GC) and rebels including other Palestinian fighters and some PFLP-GC fighters were killed.
In the latest of a string of military installations to fall to the rebels, the army's infantry college north of Aleppo was captured on Saturday after five days of fighting, a rebel commander with the powerful Islamist Tawheed Brigade said.