Israeli Prime Minister Benjamin Netanyahu said on Monday that an "interim agreement" with the Palestinians could be a solution if efforts to clinch a comprehensive peace accord fail.
But his suggestion was swiftly rejected by the Palestinians who insisted on an overall agreement that would take into account the fate of Palestinian refugees and the thorny issue of Jerusalem.
"There could be an situation in which talks with the Palestinians hit a brick wall over the issues of Jerusalem and the right of return [of refugees], and in that case the result would be an interim agreement," Netanyahu said in an interview on Channel 10 private television.
"It certainly is a possibility," the prime minister said.
"But if the Palestinians accept a demilitarized state and renounce de facto to the right of return, I'll go all the way and I think that the majority of the country [Israel] will follow me," Netanyahu added.
A spokesman for Palestinian president Mahmoud Abbas shot down the suggestion.
"For the Palestinians, any suggestion of reaching an interim agreement is unacceptable because it omits Jerusalem and the issue of refugees," spokesperson Nabil Abu Rudeina said.
Chief Palestinian negotiator Saeb Erakat also dismissed Netanyahu's suggestion, saying "interim solutions are rejected part and parcel."
"It's now time for final solutions that include Jerusalem, refugees, borders, security, settlements, water and the release of all Palestinian prisoners held in Israeli jails," he said.
Direct talks between Israel and the Palestinians, the first for nearly two years, began in Washington on September 2. But they stalled when a partial 10-month freeze on Israeli settlement building expired on September 26.
The Palestinians refused to resume negotiations without a new moratorium and Washington admitted on December 7 that it had failed to convince Israel to renew the building curbs.
Palestinian negotiators have emphasized a set of alternatives to new talks, including seeking recognition of a Palestinian state along the borders that existed in 1967, before the Six Day War.