Officials close to the Mideast peace talks say an agreement is emerging that would extend negotiations through 2015 in exchange for the release of a convicted American spying for Israel.
The deal would also include the release of hundreds of Palestinian prisoners and a partial freeze on construction of Jewish settlements in the West Bank.
U.S. Secretary of State John Kerry and Israeli Prime Minister Benjamin Netanyahu hammered out details of the plan Tuesday, during their second set of talks in as many days.
Kerry, who also met with Palestinian negotiators, will return to Israel and Ramallah for further talks on Wednesday, State Department spokesperson Jen Psaki said.
Under the proposed deal, Jonathan Pollard, a civilian intelligence analyst for the U.S. Navy, would be released before the Jewish holiday of Passover, which begins in mid-April.
The deal would not include a freeze on Jewish settlement construction in the West Bank, AP reported, but "would envisage Israel commiting to showing 'great restraint' and not issue new housing tenders."
FILE - In this Friday, May 15, 1998 file photo, Jonathan Pollard speaks during an interview in a conference room at the Federal Correction Institution in Butner, N.C.
Pollard, a former civilian intelligence analyst for the U.S. Navy, was arrested in 1985 and pleaded guilty to passing classified documents to Israel, including information on Soviet weapons. U.S. presidents have consistently refused Israeli pleas to free Pollard, who was granted Israeli citizenship in 1995.
Far-right members of Prime Minister Netanyahu's ruling coalition oppose additional prisoner releases. If U.S. President Barack Obama frees Pollard, it could quiet those objections and give the Israeli leader room to reach a broader settlement.
Breaking with past policy on Pollard appears less of a political risk for Obama because many leading Republicans now support his release, including U.S. Senator John McCain and former secretaries of state Henry Kissinger and George Schultz.
Peace talk push
Kerry unexpectedly returned to the region for the second time in less than a week Monday, to keep the peace talks from collapsing.
Palestinians are threatening to quit the talks now if Israel does not free the last group of detainees agreed to in a deal that opened this peace process eight months ago.
Israel had demanded the Palestinians agree to extend the talks before it released the last group of Palestinian prisoners as agreed upon in the deal that revived the peace talks eight months ago.
The Palestinians said suspending the release violated the terms of the deal, and threatened to abandon the talks.
The head of the Palestinian Center for Policy and Survey Research Khalil Shikaki says Netanyahu needs concessions from the Palestinians in order to appease intense opposition to the release by right-wing members of his coalition. But he says Palestinian leaders cannot accept some of Israel's demands.
"The basic compromises that this Israeli government is willing to endorse are unacceptable to the majority of the Palestinians," Shikaki said. "And so there is no chance if the same issues are going to be on the table. The Palestinians would be happy to move along with something similar to what they have done in the past, but with the current demands."
He said the unacceptable demands include a long-term Israeli military presence in parts of the West Bank, a demand that the Palestinians recognize the Jewish character of Israel, and other issues regarding Jerusalem and any possible territorial swaps.
A team of U.S. diplomats have been meeting intensively with both sides in recent days trying to bridge the differences.