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The plan, drafted in part by ex-military and intelligence officials, includes land swaps and no right of return.
The Labour party vote could determine the fate of Israel's governing coalition.
Barak and Ayalon to face each other in runoff elections for Labour leadership.
Television polls predict a second round runoff between Ehud Barak and Ami Ayalon.
The party leadership election could force the prime minister to resign.

Sexual humiliation of the kind practised by US military police at Abu Ghraib prison does little to help interrogators gain useful information, say Israeli counter-terrorism experts.

Middle East peace activists have warned that "time is running out" on an Israeli-Palestinian two-state solution.
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Muslim volunteers face questioning and threat of arrest, while aid has been disrupted or blocked, charities say.
Six months on, outrage and sorrow over the mass schoolgirl abduction has disappeared - except for families in Nigeria.
ISIL combatants seeking an 'exit strategy' from Mideast conflict need positive reinforcement back home, analysts say.
European nation hit by a wave of Islamophobia as many young fighters join ISIL in Syria and Iraq.
 
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