The Palestinians said they already recognised the state of Israel, and that the real issue threatening peace talks is illegal settlement activity.

Israel has been under international pressure to renew its partial freeze on construction in the occupied West Bank and the Palestinians have threatened to walk out of the talks over the issue.

The direct negotiations only resumed last month after a 20-month hiatus, and no meeting has been held since the freeze ended on 26 September.

In a speech to the Israeli parliament on October 11, Prime Minister Benjamin Netanyahu said: "If the Palestinian leadership will say unequivocally to its people that it recognises Israel as the nation-state of the Jewish people, I will be prepared to convene my cabinet and request an additional suspension of building for a limited period of time."

Mr Netanyahu said he has made the offer to the Palestinian Authority "in quiet ways" last month, but that it has been rejected.

The chief Palestinian negotiator, Saeb Erekat, said Mr Netanyahu is "playing games" with his offer, and that there is no connection between settlements and the national character of Israel.

Israel has occupied the West Bank, including East Jerusalem, since 1967, settling close to 500,000 Jews in more than 100 settlements. They are considered illegal under international law, although Israel disputes this.

Palestinian officials say recognising Israel as a Jewish state would compromise the rights of 20% of the Israeli population that is not Jewish, and undermine the claims of Palestinian refugees to return to their former homes in Israel.