Israeli Prime Minister Benjamin Netanyahu is ready to partially freeze West Bank settlement building if it will bring the Palestinians back to direct talks, an Israeli newspaper reported on Friday.
But the Palestinians said they were unaware of any such offer, and said that anything short of a full freeze would not be acceptable.
According to Haaretz, Netanyahu's offer was made on Wednesday in talks with Colombian Foreign Minister Maria Angela Holguin.
During the meeting, which came a day after she held talks with president Mahmud Abbas in Ramallah, Holguin told Netanyahu that the Palestinian leader desperately needed a symbolic gesture on settlements if he was to return to negotiations, a senior Israeli official told the paper.
In response, Netanyahu said he would be "ready to make such a gesture if it would return Abbas to the negotiating table" and agreed to freeze all government-sponsored construction and all building on state land.
But he said he would not agree to freeze settlement activity by private developers on privately owned land -- which, according to a recent Palestinian study, constitutes around 80 percent of settlement activity.
The official said the offer would test whether or not Abbas was serious about returning to direct negotiations.
"Netanyahu said he was ready to test Abbas by making the gesture regarding settlements. 'If Abbas is serious about negotiations, he will renew direct talks,' Netanyahu said."
The Israeli official said the new proposal was relayed to Abbas on Wednesday, but Palestinian negotiator Saeb Erakat on Friday said it was the first they had heard of it, and insisted that only a full halt to settlement, including in annexed east Jerusalem, would suffice.
"We want to hear officially from the Israeli government that they accept to stop settlement on all Palestinian lands, including in Jerusalem and natural growth, and to recognise the 1967 borders," Erakat told AFP.
"The Israeli government knows very well how to inform us officially. Until now, no-one has told us anything," he said.
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In order to resume direct talks, the Palestinians are demanding a total freeze on all settlement activity, and a commitment from Israel that any future negotiations be based on the lines which existed before June 1967.
Israel says both demands are preconditions, and has refused to accept either of them.
Netanyahu's spokesman Mark Regev refused to comment directly on the Haaretz report, saying only: "The prime minister's position has not changed -- he is ready for direct peace talks with the Palestinian Authority without any preconditions."
Earlier this week, Palestinian prime minister Salam Fayyad said the time was not right to resume meaningful dialogue with Israel in a rare comment on the political process.
"Our own assessment is that the conditions are not ripe at this juncture for a meaningful resumption of talks," he told a pro-Palestinian lobby group in Washington on Wednesday.
He said the process had failed -- but "not for lack of talks."
"It's precisely because those talks were attempted so many times before, but not on the basis of terms of reference that were consistent with what is required to bring this conflict to an end in a manner that is remotely related to what international law requires," he said.
Direct talks were last held in September 2010 but ran aground within weeks after the expiry of a temporary freeze on West Bank settlement construction, which Israel did not renew.
The Palestinians say they will not talk while Israel continues to build on land they want for a future state.
Colombian mediation efforts began earlier this month when Abbas visited Bogota in an attempt to secure support for a Palestinian bid to secure state membership at the United Nations.
Colombia, a UN Security Council member, opposes the bid as does Israel and the United States, with all three saying a Palestinian state can only emerge through bilateral negotiations and not through a UN vote.
The request was formally presented by Abbas on September 23 and is currently being studied by the Security Council which could vote on it as early as November 11, a senior Western diplomat said on Wednesday.