Israel is to discuss a 90-day construction freeze in West Bank proposed by the United States, sources say.

At the recent Washington meeting between Israeli Prime minister Binyamin Netanyahu and Secretary of State, Hillary Clinton, US reportedly proposed an incentive package to reinstate a moratorium on West Bank settlement building. However, the proposal does not include a suspension of settlement activity in East Jerusalem.

Sources suggest that US has also agreed that it would not ask Israel for any further settlement freeze if this proposal is agreed upon. Settlers in West Bank have reportedly begun work on 1,649 homes, since the earlier 10-month moratorium expired on September 26.

The latest proposal by the US is believed to be an effort to revive the recently stalled peace talks between Israel and the Palestinian Authority. On Sunday, Israel cabinet held preliminary consultations within, but, the details of the plans are yet to be worked out. 

It is not yet final, it is still being formulated by our team and that of the Americans, Netanyahu told a group of reporters on Sunday.

It was in last week that the Palestinians, backed by the Arab league refused to resume the peace talks until Israel ceases settlement activity in both West Bank and East Jerusalem. The side had already raised objections on reports of the proposed moratorium.

The first issue is that the exception of Jerusalem is forbidden and does not make sense for the establishment of an independent state without East Jerusalem as its capital, Saeb Erekat, the chief Palestinian negotiator, told Al Jazeera news on Sunday afternoon.

It is likely that Israel could come in terms with Washington on the proposal as it would like its ally to veto UN resolutions on the Goldstone report on Gaza war, and the raid on the Gaza bound aid flotilla in May.