US president Donald Trump proposed the creation of a Palestinian state with a capital in East Jerusalem, dependent on Palestinians taking steps to become self-governing, in an attempt to achieve a peace breakthrough in their decades of conflict with Israel.
Senior administration officials, briefing Reuters on the plan the president announced at the White House, said that under Trump's proposed Middle East peace plan the United States will recognise Israeli settlements on the occupied West Bank.
In exchange, Israel would agree to accept a four-year freeze on new settlement activity while Palestinian statehood is negotiated.
"Today, Israel has taken a giant step toward peace," Trump said as he announced the plan at the White House with Israeli Prime Minister Benjamin Netanyahu at his side, saying he also sent a letter about it to Palestinian President Mahmoud Abbas.
"This is a historic day," Netanyahu said, comparing Trump's peace plan to former President Harry Truman's 1948 recognition of the state of Israel. "On this day, you became the first world leader to recognize Israel's sovereignty over areas in Judea and Samaria that are vital to our security and central to our heritage," he added, using the Biblical names for the West Bank.
While Israeli leaders have welcomed Trump's long-delayed plan, Palestinian leaders had rejected it even before its official release, saying his administration was biased towards Israel.
The absence of the Palestinians from Trump's announcement is likely to fuel criticism that the plan tilts toward Israel's needs rather than those of the Palestinians.
Israeli-Palestinian talks broke down in 2014, and it was far from clear that the Trump plan will resuscitate them.
US officials said they were braced for initial Palestinian scepticism but hoped that over time they will agree to negotiate. The plan places high hurdles for the Palestinians to overcome to reach their long-sought goal of a state.
It remains to be seen also how Israel responds, given the pressures its right-wing prime minister, Netanyahu, faces going into his third attempt at re-election in less than a year.
The US plan represented the most dramatic and detailed attempt to break the historic deadlock between Israel and the Palestinians in several years, the result of a three-year effort by Trump senior advisers Jared Kushner and Avi Berkowitz and former adviser Jason Greenblatt.
Outline of two states
Trump has endorsed a proposed map outlining the two states, the officials said. The Palestinian state would be double the size of land that Palestinians currently control and would be connected by roads, bridges and tunnels, the official said.
Asked what Washington was prepared to do to advance negotiations, the officials said it was up to the Palestinians to come forward and to say they are prepared to negotiate.
Israeli leaders have agreed to negotiate on the basis of the Trump plan and agreed to the map, the officials said. Israel's agreement on statehood for Palestinians is dependent on a security arrangement to protect Israelis, they said.
Israel will also take steps to ensure Muslim access to al-Aqsa mosque in Jerusalem and respect Jordan's role regarding holy sites, the officials said.
Palestinian statehood would be dependent on Palestinians taking steps for self-government, such as respect for human rights, freedom of the press and having transparent and credible institutions, the officials said.
"In doing the map it's incredibly difficult to try to create contiguity for a Palestinian state based on what's happened over the past 25 years so if we don't do this freeze now I think that their chance to ever have a state basically goes away," said one official in reference to the growth of Jewish settlements.
"So what we've done is basically we've bought four more years for them to get their act together and try to negotiate a deal for them to become a state, and I think this is a huge opportunity for them," the official said.
The official said the question for Palestinians is will they "come to the table and negotiate?"
If they agree to negotiate, there are some areas that can be compromised in the future, the official said without offering details.
Trump's plan calls for Palestinians to be able to return to a future state of Palestine and creates a "generous compensation fund," the official said.
About Israel retaining the settlements, a US official said: "The plan is based on a principle that people should not have to move to accomplish peace ... But it does stop future settlement expansion which we consider to be the most realistic approach.
"The notion that hundreds of thousands of people, or tens of thousands of people, are going to be removed either forcibly or not from their homes is just not worth entertaining," the official said.
A Netanyahu spokesman said the Israeli leader would fly to Moscow on Wednesday to brief Russian President Vladimir Putin on the proposals.
Before the Trump announcement, thousands of Palestinians demonstrated in Gaza City and Israeli troops reinforced positions near a flashpoint site between the Palestinian city of Ramallah and the Jewish settlement of Beit El in the West Bank.
Palestinian leaders had said they were not invited to Washington, and that no plan could work without them.
On Monday Palestinian leader Mahmoud Abbas said he would not agree to any deal that did not secure a two-state solution. That formula, the basis for many years of frustrated international peace efforts, envisages Israel co-existing with a Palestinian state.
Palestinians have refused to deal with the Trump administration in protest at such pro-Israeli policies as its moving the US Embassy in Israel from Tel Aviv to Jerusalem, whose eastern half the Palestinians seek for a future capital.
The Trump administration in November reversed decades of US policy when Secretary of State Mike Pompeo said Washington no longer regarded the settlements on West Bank land as a breach of international law. Palestinians and most countries view the settlements as illegal, which Israel disputes.