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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.
Featured on Al Jazeera
Weaving and handicrafts are being re-taught to a younger generation of Iraqi Kurds, but not without challenges.
The author argues that in the new economy, it's people, not skills or majors, that have lost value.
Colleagues of detained Al Jazeera journalists press demands for their release, 100 days after their arrest in Egypt.
Mehdi Hasan discusses online freedoms and the potential of the web with Wikipedia founder Jimmy Wales.
 
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Three years since the start of the uprising, nine million people have been displaced by fighting.
An in-depth look at Egypt's ongoing political crisis.