The official said the proposal is unacceptable to the Palestinians, underscoring the tough road ahead as the sides try to reach an agreement ending decades of conflict.
The official spoke on condition of anonymity because Israel and the Palestinians have pledged to US Secretary of State John Kerry not to discuss the content of their talks with the media a pledge that has largely held up until now.
With Israeli Prime Minister Benjamin Netanyahu opposed to a return to the pre-1967 lines, the idea of a Palestinian state in temporary borders has gained appeal with the Israelis.
Such a deal could give the Palestinians independence, while leaving the thorniest issues, such as the fate of Jerusalem and the status of millions of Palestinian refugees and their descendants, to later negotiations. The Palestinians reject any notion of a provisional agreement, fearing that a temporary arrangement that falls short of their dreams will become permanent.
After months of US mediation, the Palestinians agreed to resume talks. Although Israel did not pledge to freeze settlement construction, US officials have said they expect both sides to avoid provocative moves.
Negotiators have been quietly meeting once or twice a week for the past month or so.
