Israel has handed the Palestinians a proposal aimed at extending peace talks beyond an April 29 deadline in efforts to salvage negotiations.
According to a Palestinian official, Israel presented Palestinian President Mahmoud Abbas with a draft agreement on Sunday to push forward with the talks. Abbas was to examine the proposal, he said.
An Israeli official would not provide details on the proposal but told AFP: "Now the Palestinians need to reply if they are willing to continue negotiations."
Israel broke a commitment to free 26 Palestinian prisoners on March 29, a key plank in the original US-brokered terms to relaunch the peace process.
Israel, on Friday, informed the Palestinians it would not free the prisoners as it had previously agreed, with the US State Department confirming it was working "intensively" to resolve the dispute.
The Palestinians say they will not even consider extending the talks without the prisoners being freed, but Israel has refused to release them without a Palestinian commitment to continue the talks, prompting a fresh crisis of confidence.
"The ball is now in Israel's court," Issa Qaraqaa, the Palestinian prisoners' minister, told Voice of Palestine radio, saying the leadership was expecting an answer from the Israeli government within 24 hours.
"We agreed to the fourth batch," Israeli Intelligence Minister Yuval Steinitz told reporters on Sunday, while stressing it would not happen as long as Abbas was preparing to "blow up the negotiations" the very next day.
US mediation efforts
With the talks teetering on the brink of collapse, Washington has been fighting an uphill battle to coax the two sides into accepting a framework proposal that would extend negotiations beyond April 29.
US Secretary of State John Kerry broke from his travel schedule for the second time in a week on Monday to return to the Middle East to discuss the fragile talks with leaders from both sides.
Days ago, Kerry had interrupted a visit to Rome to go to Amman for talks with Abbas to try to convince him to prolong the negotiations beyond the deadline and to press Israel to release the prisoners.
Under the deal that relaunched the peace talks, Israel agreed to release 104 prisoners, held since before the 1993 Oslo peace accords, in exchange for the Palestinians freezing all efforts to seek further international recognition.
So far, Israel has freed 78 of them in three batches, and the last group - which the Palestinians insist includes 14 Arab Israelis jailed for nationalist attacks - was to have been released on March 29.
Thousands in protests
Meanwhile, Palestinians and Arab Israelis commemorated Land Day on Sunday, with rallies remembering six of their number who were shot dead during a 1976 demonstration against land seizure.
In the northern Israeli town of Arraba, thousands of people turned out for the main demonstration, many waving Palestinian flags, an AFP correspondent said.
A smaller gathering also took place in Sawawil, a Bedouin village in the southern Negev desert which is not recognised by Israel, with police saying hundreds participated.
In occupied east Jerusalem, some 70 demonstrators gathered outside the walls of the Old City by Damascus Gate, throwing stones and chanting slogans, a police spokeswoman said, adding that the rally was quickly broken up and one person was arrested.
There were also several gatherings in the Gaza Strip, with scores of people attending a demonstration near the northern town of Jabaliya organised by the ruling Hamas movement.