The captives, including Gov. Guillermo Gaviria and former Defense Minister Gilberto Echeverri, were killed as the soldiers approached the rebel camp where they were being held, according to a presidential statement released Monday.
Gaviria and Echeverri were kidnapped in April 2002 as they led a peace march.
"A guerrilla known as 'The Paisa' gave the order to murder the hostages," the statement said.
A communique allegedly received from the Revolutionary Armed Forces of Colombia, or FARC, and broadcast by Medellin radio stations, blamed the government for the deaths.
"The FARC holds directly responsible Mr. Alvaro Uribe Velez," the statement said, referring to the president.
Earlier reports indicated bodies were in a grave in the jungle-covered mountains of Antioquia state, but the statement made no mention of that.
One hostage escaped unharmed and two were wounded in the incident.
Uribe flew to Medellin Monday, Antioquia's state capital, after hearing the news. He was due to address the nation later Monday.
The killings outraged Colombians long inured to a four-decade civil war, and led to renewed calls for the government to exchange imprisoned rebels for hostages held by the guerrillas.
"I am truly shaken," said former President Ernesto Samper, under whom Echeverri served as defense minister. "It seems to me that we've reached intolerable levels of violence."
Officials at the Colombian attorney general's office confirmed that 10 bodies had been discovered in a common grave near the village of Urrao, 48 kilometers (30 miles) west of Medellin. It was unclear when the victims died.
Uribe, who previously served as governor of the Antioquia province in the mid-1990s, has taken a hard line against leftist rebels who have fought a succession of elected governments in this South American country.
He has been under intense pressure from the Catholic Church and relatives of political prisoners to exchange rebels in government jails for the hostages.
Uribe has said he would only consider an agreement if it was brokered by the United Nations and included the freedom of all hostages, not just the political hostages.
Gaviria and Echeverri were kidnapped on April 21, 2002, as they led hundreds of peace marchers from Medellin to the village of Caicedo to meet with the FARC commanders. The village had declared itself a nonviolent community, but guerrillas had confronted residents.
As the march approached Caicedo, a small group of armed rebels intercepted the march leaders and told them rebel commanders in the hills wanted to question them. The rebels allowed other marchers to walk away.
The FARC also is holding 12 state lawmakers they kidnapped last year in a raid on state legislature, as well as dozens of soldiers and police officers and three American contractors captured in February when their plane went down in rebel territory.
The rebels are fighting the government and illegal right-wing paramilitary forces in a conflict that kills some 3,500 people annually, mostly civilians.
Despite the killings of Gaviria and Echeverri, some maintained hope that all chances for a future peace process in Colombia were not lost.
"We can't lose confidence that one day Colombia will emerge from this nightmare and this pain," said the Vatican's representative in Colombia, Benglamino Stella.