Israeli Defence Minister Ehud Barak believes Israel should evacuate dozens of isolated Jewish settlements in the West Bank while annexing larger blocs that are home to most of the settler population.

In excerpts of an interview in Yisrael Hayom published Monday, Barak said he was mulling a plan which would see Israel relinquish dozens of settlements while allowing residents of big blocs -- Gush Etzion, Maale Adumim and Ariel, where up to 90 per cent of the settlers live -- to become part of Israel.

"It would be better to reach an agreement with the Palestinians, but if that doesn't happen, we will need to act to start separating," he said.

"It is time to look Israeli society in the eye and say: we managed to retain in Israel 80-90 per cent of the settlers who arrived [in the West Bank] over the years at the government's initiative and with its encouragement.

"It would be a big achievement if we manage to bring them into Israel's permanent borders," he said.

He said such a move would help Israel not only vis-a-vis the Palestinians but also in its relations with other Arab and Muslim countries in the region and with Washington.

It is not the first time that Barak has raised the idea of a unilateral withdrawal from parts of the West Bank, but it comes as rumours surface of a possible early election.

A general election is currently scheduled for October 2013 but could be pulled forward to the start of the year.

A member of Prime Minister Benjamin Netanyahu's right-wing coalition, Barak could be seeking to distinguish himself from Netanyahu's Likud party by positioning himself as a more peace-seeking alternative.

Barak stressed that Israel should strengthen Palestinian president Mahmud Abbas, who was a "partner" for peace, but also blamed the Palestinian leader for the stagnation in peace talks between the sides.

"I don't think that if we'd want it more, there would be peace," he said. "The bulk of the responsibility is on the Palestinian side."