Israeli negotiators have told their Palestinian counterparts that the Separation Wall that cuts through the occupied West Bank will serve as the border of a future Palestinian state, local media reports said.

Just hours before US Secretary of State John Kerry's arrival for top-level talks on ongoing direct peace negotiations on Tuesday, two press reports said the Israeli team had made the proposal.

"Israel's opening position was that the border be the route of the separation barrier [wall], and not the 1967 lines as the Palestinians have demanded," public radio said in a report, which also featured in the top-selling Yediot Aharonot.

Since talks resumed in late July, the Palestinians have repeatedly complained about Israel's lack of clarity on the issue of borders.

The Palestinians insist the talks be based on the lines that existed before the 1967 Six Day War, when Israeli seized and occupied Gaza, the West Bank and Arab east Jerusalem.

But Israeli Prime Minister Benjamin Netanyahu has rejected any return to the 1967 lines as "indefensible", saying that would not take into account the "demographic changes" over the past 46 years, in a clear euphemism for Jewish settlements.

Israel reneges?

Israel began work on its sprawling wall in 2002 at the height of the second intifada, and has defended its construction as a protective measure, pointing to a drop in attacks inside Israel as proof of its success.

But Palestinians, who refer to its as the "apartheid wall", say it is a land grab. When complete, 85 percent of it will have been built inside the West Bank.

There was no confirmation of the report from Netanyahu's office, which has refused to comment on the content of the ongoing peace talks in line with a US-requested media blackout.

Former Israeli prime minister Ariel Sharon, who oversaw the start of the barrier's construction, repeatedly insisted that the barrier was not a border for a future Palestinian state but only a measure to keep out attackers.

When construction began, Israel resisted calls to route it along the so-called Green Line, which acted as a de facto border between 1949, when fighting ended after Israel was established, and the 1967 war.

In 2004, the International Court of Justice issued a non-binding opinion declaring the barrier contrary to international law, which was ignored by Israel.