Picture: (AFP/File/Musa al-Shaer)
Israeli soldiers keep watch as Palestinian children join foreign and Israeli demonstrators during a protest in the West Bank village of Maasarah.

An Israeli newspaper says Israeli Prime Minister Ehud Olmert has offered a peace plan giving the Palestinians 93 percent of the occupied West Bank. But the Palestinians denied the report.

Israel's Haaretz newspaper says the proposed border is at the heart of a broader plan that would compensate the Palestinians with the equivalent of 5.5 percent of the West Bank adjacent to the Gaza Strip and a route connecting Gaza to the West Bank itself.

However, Palestinian president Mahmud Abbas would only receive the land and the overland connection once his forces retake the Gaza Strip from the Hamas movement, which seized power in the coastal territory in June 2007.

But Palestinian negotiator Saeb Erakat says the report was "baseless." "These are half-truths used by Israelis as a test balloon so they can blame the Palestinian authority should the negotiations fail".

Haaretz says the proposal has been offered in the context of US-backed peace talks re-launched in November with the goal of resolving the decades-old conflict by the end of the year.

The proposed agreement however would be a "shelf agreement" to be implemented in the coming months and years, and would not immediately include the thorny issue of the future status of Jerusalem.

The Palestinians have demanded mostly Arab east Jerusalem, which Israel occupied and annexed in the 1967 Six Day War, as their capital, while Israel considers the entire Holy City its "eternal, undivided" capital --a claim not recognized by the international community.

MRN-AFP