Nabil Abu Rdainah, Abbas' spokesman, told the official WAFA news agency Israeli Prime Minister Ehud Olmert's plan showed a "lack of seriousness."
Under the proposal, Israel would return to the Palestinians some 92.7% of the West Bank, plus all of the Gaza Strip, according to Western and Palestinian officials briefed on the negotiations.
Olmert's proposal does not offer a solution to competing claims to the holy city of Jerusalem, and would only be implemented once Abbas reined in terror groups and re-established control of the Gaza Strip, which Hamas seized a year ago.
In exchange for West Bank land that Israel would keep, Olmert proposed a 5.3% land swap giving the Palestinians a desert territory adjacent to the Gaza Strip.
Olmert's proposal first emerged several months ago and was published in detail on Tuesday by Haaretz, prompting Abu Rdainah's response.
"The Israeli proposal is not acceptable," Abbas' spokesman said. "The Palestinian side will only accept a Palestinian state with territorial continuity, with holy Jerusalem as its capital, without settlements, and on the June 4, 1967 boundaries."
He called the Israeli proposal a "waste of time".
Olmert spokesman Mark Regev said the prime minister was serious about continuing the peace talks.
But another Israeli official said Olmert was merely trying to establish his legacy. "There is going to be no agreement, period," he said on condition of anonymity.