Palestinian President Mahmoud Abbas has said that Israel must take on Palestinian governance if peace talks with Tel Aviv fail.

Addressing a group of Israeli journalists on Tuesday, Abbas said that Israel's policies had left his West Bank government powerless and that if it continued its path he would "let it come and run this authority."

"If the negotiations stop, it's the Israeli government that will bear the responsibility for the economic situation and the paying of the salaries of (Palestinian) employees, workers and farmers, for health and for education just as it did before the establishment of the Authority," he told the reporters visiting presidential headquarters in Ramallah.

"Also it will bear responsibility for security, meaning Israel will bear full responsibility ... We hope that we won't come to this period but that we come to solutions," he said.

His comments came as US envoy Martin Indyk went into a new meeting with Israeli and Palestinian negotiators in a bid to save the US-sponsored talks from collapse.

Abbas said he would agree to an extension of negotiations beyond the April 29 deadline, if Israel frees a group of prisoners as previously earmarked for release and discusses the borders of a future Palestinian state.

"There must be a total freeze of settlements," by Israel in the occupied West Bank including annexed East Jerusalem, Abbas said.

"The borders between Israel and the state of Palestine must also be defined within a month, two or three," if the talks are to be extended, he said.

"Israel cannot accept"

The peace process was engulfed by crisis last month after Israel refused to free a fourth and final group of 26 veteran Arab prisoners which would have completed an agreement that brought the sides back to negotiations last July.

If the negotiations stop, it's the Israeli government that will bear the responsibility for the economic situation ... just as it did before the establishment of the Authority. - Mahmood Abbas, Palestinian president

An official in the Israeli prime minister's office condemned the statement by Abbas, nicknamed Abu Mazen, saying it showed a lack of Palestinian commitment to the peace process.

"He who wants peace does not time after time present terms which he knows Israel cannot accept," said the source, who declined to be named. "Abu Mazen only wants to receive without giving anything in return."

Fourteen of the prisoners Israel had agreed to free from its jails are Arabs with Israeli citizenship. Abbas said on Tuesday he rejects an Israeli demand to deport them away from their homes to the West Bank or Gaza as a security precaution.

Abbas responded by signing 15 international treaties, including the Geneva Conventions on the conduct of war and occupations.

Tel Aviv condemned the move as a unilateral step towards Palestinian statehood.

Israel has been keen for Palestinian leaders to recognise it as a Jewish state - something Abbas has refused to do - and has been reluctant to commit to the pre-1967 lines as the basis for borders between two states.