Prime Minister Binyamin Netanyahu is willing to release prisoners jailed prior to the Oslo Accords and officially freeze settlement construction outside of the main blocs in order to help restart the peace process, Hebrew daily Ma'ariv reported on Tuesday, quoting Western diplomats.

In return, Palestinian Authority President Mahmoud Abbas will give up his main precondition to start talks based on the 1967 lines, the Western diplomats are quoted as saying.

The diplomats say this plan, led by US Secretary of State John Kerry, is meant to allow each of the leaders to save face publicly and appear as if they did not have to back out of their positions.

Netanyahu sees the release of the prisoners as a gesture to the Palestinians, rather than a concession, while Abbas could claim this as a personal achievement to his credit, the diplomats are quoted as saying.

Chief Palestinian negotiator Saeb Erekat, however, denied knowledge of plans for such a gesture. Speaking to Army Radio, Erekat said he hadn't heard of the reported initiative to release prisoners, and stressed that negotiations would only begin when Netanyahu agrees on the creation of a Palestinian state based on the 1967 borders.

Earlier this month, Fatah Central Committee member Hussein al-Sheikh told Israel Radio that the PA had asked Israel to release 120 Palestinian prisoners that have been jailed prior to the Oslo Accords.

The list of 120 names had been passed on to both Israel and to Kerry, and while the PA leadership was still awaiting answer, a few Israeli officials have expressed a "positive position" on the matter, according to al-Sheikh.

On Monday, Jerusalem noted an achievement to its credit when the EU decided not to issue detailed conclusions critical of Israel, that could undermine Kerry's efforts and signal to Palestinians that other routes for the formation of a Palestinian state are available.

Kerry is expected to return to Israel and the Palestinian Authority later this week for his fifth visit in four months, to once again try to bring the two sides to the negotiating table.

Netanyahu, at the start of his meeting with the visiting Georgian Prime Minister Bidzina Ivanishvili on Tuesday morning, said that he was committed to comprehensive negotiations with the Palestinian Authority, Army Radio reported.

"Our goal is to hold enduring talks for a significant period of time so that we will be able to discuss all of the important issues," Netanyahu said.

"This will require time and for us to be determined and systematic and I hope that the Palestinian side will act in the same way," the prime minister added.   

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