Francisco Santos, Colombia’s vice-president, said his government had the money to offer "good rewards" and wanted to attract "all the bounty hunters of the world" to the country.
His announcement came after the defence minister, Jorge Alberto Uribe, admitted an undisclosed sum, believed to be more than $1 million (530,000), was paid for the capture of the rebel Rodrigo Granda, a commander of the Revolutionary Armed Forces of Colombia (FARC). He was snatched from the streets of the Venezuelan capital, Caracas, apparently by moonlighting members of the country’s security forces.
He was smuggled across the border into Colombia in the boot of a car and handed over to police in exchange for the reward.
Mr Uribe refused to disclose the amount that was paid or to whom it was handed over.
The Colombians initially denied that Granda had come from Venezuela and said that he had been arrested in Cucuta, a Colombian city near the Venezuelan border, following a police operation.
However, investigations by the Venezuelan authorities proved that Granda was snatched from a cafe in Caracas on 13 December and bundled into a van.
The Colombians later changed their story, saying it was conceivable Granda had come from Venezuela, but that he had been arrested in Colombia. They insisted that at no time had Colombian agents been active on Venezuelan soil.
However, the Colombians have been unable to explain why four Colombian policemen were arrested in Venezuela on 9 December in the central city of Maracay where Granda had been operating.
The incident has provoked a serious rupture in the already delicate relations between Colombia and Venezuela, with a furious Venezuelan president, Hugo Chavez, describing the action as a "massive violation of Venezuela’s sovereignty" and branding the Colombians liars.
"There is no doubt that the Colombian police lied when they said Granda was arrested in Colombia," said Mr Chavez. "It lied and [Colombian] president Alvaro Uribe is lying."
Colombia is unapologetic about the incident and the latest statements from the vice- president, which all but condone the kidnapping, show a hardening of the Colombian government’s position in its war against the Marxist rebels and its acceptance of irregular tactics.
"This does not set a happy precedent," said a western diplomat in Bogot. "Colombia cannot be seen to condone illegal kidnappings. There are international treaties to deal with these matters and extradition agreements."
The government of the president, Alvaro Uribe, who was educated at Oxford, has set up a system of rewards for information leading to the capture of wanted guerrillas, right-wing paramilitaries and drugs traffickers.
At the start of the programme, it was not uncommon to see hooded informers receiving bricks of cash from generals in return for providing information. The "informants’ network", as it is known, has resulted in tens of thousands of captures.
A United States-made Black Hawk helicopter on an anti-drugs mission crashed in the Colombian jungle yesterday, killing all 20 Colombian soldiers aboard, the army said.