Reaching a fully-fledged peace deal between the Palestinians and Israel is not currently reasonable, Israeli defence minister Ehud Barak said during at AIPAC conference in Washington D.C.
According to Israel's Ynetnews, Barak proposed an interim agreement with Palestinians to guarantee the national security of the Jewish state, which if rejected, would be adopted unilaterally to prevent a "bi-national state."
"Israel may need to consider unilateral steps that would include demarcating a line within which Israel would keep the settlement blocs and ensure a Jewish majority for generations to come," he said.
Barak added that the two-state solution is "not a favour" to the Palestinians, but is the only solution to the six-decade-long Palestinian-Israeli conflict.
On Friday, Israeli Prime Minister Benjamin Netanyahu temporarily froze settler housing tenders for the West Bank and east Jerusalem for this month, when US President Barack Obama will visit.
Netanyahu had told officials the "suspension" did not amount to a freeze in settlement construction, and that it would only be in place until the end of Obama's trip to avoid "embarrassing" leaders, Maariv newspaper reported.
In March 2010, Israel sparked the ire of the US administration by announcing, during a visit by vice president Joe Biden, that 1,600 new homes would be built in the east Jerusalem quarter of Ramat Shlomo.
Obama is to meet Israeli and Palestinian leaders in Jerusalem and Ramallah during his visit on 20-22 March, his first as president.
The White House says Obama has no plans to use the trip to push new proposals to break the more than two-year deadlock in Palestinian-Israeli peace talks.
On the same day of Netanyahu's announcement, Palestinian President Mahmoud Abbas said that the Middle East will see "no peace or stability" unless Israel releases all Palestinian prisoners, pointing out that some prisoners have spent more than 25 years in prison.
"The PA is exerting intensified efforts to end their [Palestinian prisoners] suffering. We call on the United Nations to form an international investigation committee on Jaradat's death, as we insist on knowing the complete truth," Abbas said during his meeting with the family of Palestinian prisoner Arafat Jaradat, who died on Saturday after allegedly being tortured in an Israeli prison.
On Monday, Israel demanded the PA act "responsibly" and rein in unrest, as Palestinian prisoners vowed revenge over the death of Jaradat.
Jaradat's death sparked violence in the West Bank city of Hebron, his hometown, along with calls for Palestinian Premier Salam Fayyad to order a full inquiry.
Fayyad’s office issued a statement on Sunday expressing its deep sorrow and shock over "the martyrdom of prisoner Arafat Jaradat in Israeli occupation prisons."
"We affirm the need to promptly disclose the true reasons that led to his martyrdom," the statement added.
The Gaza-based Hamas movement announced that Jaradat had died from “the inhumane conditions inside Israeli prisons.”
"Israel expects the Palestinian Authority to act responsibly to prevent incitement and violence which will only exacerbate the situation," a spokesman for Netanyahu, Mark Regev, told AFP.
According to AFP, Israel's Shin Bet internal intelligence service said Jaradat had been arrested the previous Monday for his involvement in a stone-throwing incident in November 2012 during which an Israeli had been wounded.