He also said groups fighting to topple him had received increased backing from their state sponsors in a reference to countries including Turkey and Saudi Arabia.
"Sometimes, in some circumstances, we are forced to give up areas to move those forces to the areas that we want to hold onto," Assad said in a defiant televised speech in which he said were no compromise solutions in the war.
"We must define the important regions that the armed forces hold onto so it doesn't allow the collapse of the rest of the areas," Assad said. "The army is capable ... Everything is available, but there is a shortfall in human capacity," he said.
Assad has faced a series of battlefield setbacks since March: He lost most of the northwestern province of Idlib to an insurgent alliance including the al Qaeda-backed Nusra Front, and important areas of the southern border region to mainstream groups of the "Southern Front".
The ultra-hardline Islamic State group also seized the central city of Palmyra from the Syrian military in May.