JERUSALEM—Benjamin Netanyahu wants to surprise the world with a new peace initiative and jump-start the deadlocked peace process, according to a high-ranking Israeli official.

“We will take a phased approach with guarantees for a two-state solution,” said the official, who spoke on condition of anonymity.

The plan is currently being coordinated with Washington, which has so far rejected interim solutions, and with another potential adversary — Israeli Foreign Minister Avigdor Lieberman, a hard-liner and, as head of the second largest party inside the coalition, an influential powerbroker.

The plan, expected within weeks, will offer Palestinians “substantial concessions” to make it palatable, the source continued, and demonstrate Israel’s willingness to reach a peace agreement.

“We would prefer to reach a definitive, negotiated settlement,” the official explained. But in light of regional developments “which have an uncertain outcome and probably spell long-term regional instability,” that goal seems unattainable.

Palestinians have adamantly refused to return to the negotiation table if Israel does not declare a complete, unlimited settlement freeze — something Netanyahu will not agree to.

The new diplomatic initiative is still being worked out, and details have been kept secret even from Netanyahu’s innermost circle of ministers.

The carefully orchestrated leaks attempt to portray Netanyahu’s plan as a bold move to reinvigorate a decrepit peace process, and seem to be a reaction to Israel’s increasing isolation in the wake of the uprisings in the Arab world.

Within diplomatic circles, some have reacted to the news with skepticism: “We do not know any details, but most people think this is a ploy to play for time,” one source said.

Palestinians have categorically rejected any talk of a state in temporary borders as “insufficient,” especially as Netanyahu’s offer is unlikely to offer concessions or recognition of Palestinian rights in Jerusalem, a key Palestinian demand.

Israeli-Palestinian talks ground to a standstill six months ago. Since then, the Palestinians have begun a diplomatic offensive to isolate Israel internationally. The Palestinians’ ultimate aim is to gain enough international backing to unilaterally declare a state in September.

A sense of increasing isolation has begun to increase rancour within Israel as well. This week, Ilan Baruch, a distinguished diplomat and former ambassador to South Africa, quit his job at the Foreign Ministry to protest government policy. In his letter of resignation, Baruch wrote that he found it “difficult to represent and explain” his country “with integrity.” Dan Gillerman, Israel’s former ambassador to the UN, warned that the “policy of ‘let’s wait and see what happens,’” could lead “to more isolation and more delegitimization.”

In one response to the growing discontent, defence minister Ehud Barak has begun to move against some illegal settlements for the first time in months. Earlier this week, Israeli border police violently clashed with settlers as they evacuated one such outpost in the occupied West Bank.

Barak and Netanyahu made it clear they were determined to continue dismantling at least three more illegal outposts, home to an estimated 100 families. While that would hardly herald peace, it would at least address an issue that has overshadowed relations with the rest of the world for years.