The idea was splashed across all of Israel's main newspapers as Palestinian negotiators held talks about resuming peace dialogue in Brussels with envoys of the Middle East Quartet of peacemakers -- in a session which Israel declined to attend.

"The Palestinians are unwilling to enter into serious negotiations and therefore we should examine the idea of a long-term interim arrangement," a senior source in the premier's office told Israel Hayom, a newspaper considered close to Netanyahu.

"In light of the instability in the region, the only possibility is to go for an interim arrangement, on condition that it is a long-term one -- and this is what we are currently examining," he said, referring the unrest sweeping the Middle East.

Details of the plan are still sketchy but the idea is believed to involve the establishment of a Palestinian state within temporary borders, while at the same time holding talks on the principles of final status issues, the Haaretz newspaper said.

News of Netanyahu's intentions were leaked to the press as the Quartet sought to push both sides into renewing some kind of peace negotiations, which ran aground last autumn over an intractable dispute about settlements.

Netanyahu had been expected to send his chief negotiator Yitzhak Molcho to the Brussels talks, but decided to skip the meeting when it became clear there would be no direct contact with their Palestinian counterparts, Haaretz said.

"The moment there were no direct talks, there was no reason to fly out there," a source in Netanyahu's office told the paper.

Since the expiry in September of a temporary ban on settlement building -- which Netanyahu refused to extend -- the Palestinians have refused all direct contact with the Israelis, saying they will not talk while settlers build on land they want for a future state.

Members of the Palestinian negotiating team, headed by Saeb Erakat, are currently in Brussels to negotiate the parameters of the Quartet statement that will be issued after a top-level meeting of the principals when they meet in mid-March, Palestinian sources told AFP.