Palestinian negotiator Saeb Erekat did not reject the proposal outright on Sunday, but said a decision on whether to endorse it would be made after consultations with Palestinian and Arab leaders.
The proposal calls for a 90-day ban on housing starts in the West Bank, but not in war-won east Jerusalem, the Palestinians would-be capital.
Erekat says the Palestinians "have a major problem in not including east Jerusalem."
In exchange, the White House would ask Congress to supply 20 stealth fighter jets to Israel, and the US would fight international resolutions critical of Israel.
On Friday Erekat said that if Israel failed to freeze construction in West Bank settlements by the end of November, the Palestinian Authority would ask the international community to recognize an independent state.
Speaking during a visit to Morocco, Erekat said that "if the United States won't force Israel to halt settlement construction this month, our next step will be to ask the Americans to recognize a Palestinian state within the 1967 border."
He added that if the American pressure failed to bear fruit, the Palestinian Authority would turn to the United Nations Security Council and request that it recognize an independent Palestinian state.
AFP contributed to the report
- Follow Ynetnews on Facebook