Vice Premier Haim Ramon has proposed Palestinian Prime Minister Salam Fayyad and other senior officials, a broad West Bank withdrawal as part of a peace deal between Israel and the Palestinians, Yedioth Ahronoth reported Friday.
Ramon met with the leaders in an effort to put together a joint Israeli-Palestinian declaration of principles that will be presented in November at a US-sponsored Mideast peace conference.
Ramon is offering the Palestinians an Israeli withdrawal from nearly all of the West Bank, including the Arab neighborhoods of east Jerusalem, as part of a final peace deal.
According to the report, the border between Israel and the future Palestinian state will roughly follow the route of the separation fence leaving major Israeli settlement blocs and between 3 and 8 percent of the West Bank in Israel's hands.
This means that Ariel and Maale Adumin will stay within Israeli area, while settlements like Karnei Shomron, Beit El, Ofra, the haredi town of Tel Zion and many other communities will be evacuated and their territory handed over to the Palestinians.
In return, Israel will cede the same amount of land inside Israel to the Palestinians to make up for the annexed territory - possibly including a land corridor between the West Bank and Gaza, long a central Palestinian demand.
The agreement will also require both sides to immediately implement stage A of the Middle East road map: The Palestinian will disarm all armed groups in their territory, while Israel will withdraw its forces from the Palestinian towns and evacuate all illegal outposts.
Regarding Jerusalem, the proposed plan adopts Clinton's outline in the 2001 peace talks: East Jerusalem will be divided among the two states and holy sites in Jerusalem's Old City will be under the control of the various religions and no national flags will be flown.
In his talks with the Palestinians, Ramon pledged that immediately after the agreement is signed, Israel would hand over to the Palestinians three east Jerusalem neighborhoods, as goodwill gesture.
Palestinians who became refugees when Israel was founded in 1948 will not be allowed into Israel, but only into the Palestinian state, and an international fund will be set up
to pay for their rehabilitation.
Tzahi Moshe, a spokesman for Ramon, would not comment on the report. Palestinian Information Minister Riad Malki denied that Ramon had met with Fayyad or with any other Palestinian government officials.
Shimon Shiffer and AP contributed to the report