Prime Minister Benjamin Netanyahu has prepared a "tempting" plan to be presented to the Palestinians in the direct negotiations, as part of which Israel will offer to withdraw from up to 90% of the West Bank, excluding east Jerusalem, the London-based Arabic-language al-Sharq al-Awsat newspaper reported Friday.

The Prime Minister's Office denied the report, calling it "unfounded."

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According to the sources, Netanyahu informed the Western delegates he met with recently that the current situation was not right for reaching a final peace agreement between Israel and the Palestinians, and that he planned to present a proposal for a new interim agreement, which would be "extensive and tempting" to the Palestinians.

The same sources added that Netanyahu believes his offer would be tempting to the Palestinians, as it gives them an extensive part of the West Bank while evacuating a large number of settlements, without forcing them to sign an agreement ending the conflict or ceasing their demand to receive the rest of the West Bank and Jerusalem.

According to the sources, the offer matches the stand of the Hamas organization, which would welcome any new Israeli withdrawal, as long as this does not force the Palestinians to give up on the rest of the territory.

Long-term interim agreement

According to the report, Netanyahu offered Palestinian President Mahmoud Abbas in the past to establish a Palestinian state with temporary borders on up to 60% of the West Bank, but Abbas turned him down.

Netanyahu realized, the sources said, that the Palestinians would reject any offer for a permanent agreement which would be smaller than the entire territory of the West Bank together with a land exchange, and has therefore come up with the new interim agreement idea, which would enable progress ahead of a permanent agreement and allow the continuation of the negotiations.

Western sources in Ramallah told the newspaper that Netanyahu would work to reach a temporary, but long-term interim agreement, due to the growing fear of Right-wing elements in Israel of the idea of one state for two people after the failure of the two-state idea.

One of the ideas raised by Netanyahu's associates, the sources said, was coming up with a formula linking the future Palestinian state with its temporary borders to Jordan.

According to the report, such an offer may lead to disagreements on the Palestinian side, as on the one hand there are those who fear the interim agreement may turn into a permanent one and will therefore be rejected by the Palestinian leadership.

On the other hand, there are those who believe that the idea should be reexamined, as the Palestinians have nothing more to play with in their talks with US President Barack Obama.