Israel Radio reported on Friday that Sharon was ready to backtrack from his original blueprint that said Israel would leave structures in Gaza's 21 settlements intact by working out a deal to transfer them to an international agency.
But a scorched-earth policy in any Israeli withdrawal from Gaza would be certain to draw international condemnation.
Israeli officials had earlier raised the possibility of working out arrangements for settlers' homes to be turned over to Palestinian refugees.
Officials in Sharon's office could not be reached for comment on the Israel radio report.
Sharon has set a cabinet vote for Sunday on his full Gaza pullout plan despite opposition from ministers of his own right-wing Likud party.
The "withdrawal" from Gaza will be accompanied by an expansion in control of the occupied West Bank.
The Israeli army has devastated
Gaza in recent weeks
Sharon was humiliated on 2 May when his Likud party rejected a first version of his proposal to pull back unilaterally from Gaza, despite US backing for the plan.
But since then he has worked to convince sceptical ministers to accept the modified version of his so-called "separation plan".
According to an opinion poll released on Thursday, 60% of Israelis support a withdrawal from the Gaza Strip while 40% oppose the move.