A statement from Olmert's office said: "The prime minister asked to look into the matter and announced that at the end of the necessary examinations the matter will be discussed by the cabinet."
It said no date had been set for a cabinet discussion.
Palestinians face 'isolation'
David Shearer, the head of the UN office for the co-ordination of humanitarian affairs, told Al Jazeera that the barrier, which reaches 22km inside the West Bank at its deepest point, is "cutting off Palestinians from Palestinians".
He said it is becoming increasingly difficult for Palestinians to cross from one side of the barrier to the other, leaving many cut off from their families, employment, and their land.
According to Haaretz, the new route would enclose the Jewish settlements of Naaleh and Nili, which are home to 1,500 Israelis, on the Israeli side of the barrier.
It would also enclose roughly 20,000 Palestinians between the barrier and the frontier with Israel.
The report said residents of the two settlements had asked for the new route.
Miri Eisin, a spokeswoman for Olmert, said the Haaretz report was untrue because Olmert "couldn't simply overturn a cabinet decision" on the original route of the barrier.
Construction of the barrier in the area of the settlements is incomplete.
Israel says the separation barrier, which is about two-thirds complete, is necessary to stop suicide bombers from reaching Israeli population centres.
When complete, the massive complex of concrete walls, barbed wire and electronic sensors is expected to be about 680km long.
The Palestinians say the barrier, which dips into the West Bank in many areas to include Israeli settlements, is being used by Israel to take land the Palestinians want for a future state.
Saeb Erekat, the chief Palestinian negotiator with Israel, said the Israeli move "undermines everything we're doing to revive the peace process".
He said: "The wall is the continuation of unilateralism and dictation, and destroys the prospects of any real negotiations."
Palestinian homes demolished
In East Jerusalem, several Palestinian homes and an apartment block have been demolished, after Israeli authorities said they were built illegally.
The residents say they have the correct permits and this is just an attempt to confiscate land.
One local resident told Al Jazeera's Owen Fay: "They demolished the house, they say, because either it's too close to the wall or because we don't have a building permit. And now with my family we have no place to go."
Fay said: "It is estimated that in the past year alone, more than 400 Palestinian homes have been destroyed either because of issues surrounding building permits or because they were too close to the wall."