The United States could free Jonathan Pollard, serving a life term for spying for Israel, as a way of saving deadlocked peace talks with the Palestinians, Israeli radio reported Sunday.

Citing Western diplomatic sources, the public broadcaster said officials in US President Barack Obama's administration had not ruled out freeing Pollard in exchange for a green light from Prime Minister Benjamin Netanyahu for releases of Israeli Arabs convicted of "terrorist acts".

Pollard, a former US Navy analyst, was arrested in 1985 for giving Israel thousands of secret documents about US espionage in the Arab world. He was sentenced to life in prison.

Israel is due to free a fourth tranche of 26 prisoners on March 29 or 30 under a deal that saw the relaunch of US-brokered peace talks with the Palestinians.

The Jewish state agreed to release a total of 104 long-term prisoners when the negotiations kick-started by US Secretary of State John Kerry began in July.

It has freed 78 so far, nearly all of whom had been jailed for more than 20 years.

The Palestinian Authority is demanding that among the next batch of prisoners to be freed should be Israeli Arabs or Palestinians from annexed east Jerusalem who hold Israeli identity cards.

Netanyahu's government rejects this demand, which could derail the current talks supposed to end on April 29 under a nine-month deadline mutually agreed by Israel and the Palestinians.

Public radio said that Pollard's release -- which successive Israeli administrations have sought to bring about -- could spark a change of heart by Netanyahu at a time when the peace process threatens to implode.

But it also said there was no indication the US administration would free the spy.

Pollard was granted Israeli nationality in 1995, 10 years after his arrest in the United States.