Israeli Prime Minister Benjamin Netanyahu said on Sunday it would be clear within "days" whether the crisis-hit peace talks would be extended beyond an April 29 deadline, local media reported.
His remarks, reported by several Israeli news websites, come as US officials work around the clock to prevent a collapse of the negotiations over a dispute about Palestinian prisoners.
"It could be a matter of just days," Netanyahu reportedly told ministers from his rightwing Likud party who met just before the weekly cabinet meeting.
"Either the matter will be resolved or it will blow up. And in any case, there won't be any deal without Israel knowing clearly what it will get in exchange," he said.
"And if there is a deal, it will be put to the cabinet for approval."
With the talks teetering on the brink of collapse, Washington has been fighting an uphill battle to coax the two sides into accepting a framework proposal which would extend the negotiations beyond April to the end of the year.
But the matter has become tied up with the fate of 26 veteran Palestinian prisoners who Israel was to have freed this weekend under terms of an agreement which brought about a resumption of talks.
Israel on Friday informed the Palestinians they would not free the detainees, with US State Department confirming it was working "intensively" to resolve the dispute.
The Palestinians say they will not even consider extending the talks without the prisoners being freed, but Israel has refused to release them without a Palestinian commitment to continue the talks, prompting a fresh crisis of confidence.
"We agreed to the fourth batch," Intelligence Minister Yuval Steinitz told reporters on Sunday, while stressing it would not happen as long as Palestinian president Mahmoud Abbas was preparing to "blow up the negotiations" the very next day.
But Zehava Galon who heads the leftwing Meretz party urged Netanyahu "to take brave decisions, even if they are difficult."
"The Israeli government cannot unilaterally break promises that we made under the auspices of the Americans," she said, adding that despite the difficulty in releasing such prisoners "the government must implement the fourth phase."
"The ball is now in Israel's court," Palestinian prisoners minister Issa Qaraqaa told Voice of Palestine radio on Sunday, saying the leadership was expecting an answer from the Israeli government within 24 hours.
Aside from the release of the 26 veteran detainees, Abbas reportedly wants an Israeli commitment to free even more prisoners as one of his conditions for agreeing to extend the talks.
Late on Saturday, an official in Ramallah told AFP that Netanyahu had expressed willingness to free another 400 detainees and reduce its military presence in the West Bank in exchange for Palestinian agreement to extend the talks.
Israeli officials refused to comment.
Under a deal that relaunched peace talks last July, Israel agreed to release 104 prisoners held since before the 1993 Oslo peace accords in exchange for the Palestinians freezing all efforts to seek further international recognition.
So far, Israel has freed 78 of them in three batches, and the last group -- which the Palestinians insist includes 14 Arab Israelis jailed for nationalist attacks -- was to have been released on March 29.