Israeli Prime Minister Benjamin Netanyahu rejects a return to the 1967 lines, and has signaled he wants to retain large parts of the West Bank, where hundreds of thousands of Jewish settlers live. Netanyahu also opposes any shared control over east Jerusalem, the Palestinians hoped-for capital. Israel withdrew from Gaza in 2005.
The U.S. diplomatic officials said Kerry and his security adviser, retired Gen. John Allen, have been working on security issues in hopes of breaking the deadlock. They believe the absence of any concrete plans so far is a main reason for the lack of progress.
The American officials spoke on condition of anonymity because Kerry has not yet presented his proposals.
The Haaretz daily said that Allen would present his ideas at a meeting with Netanyahu on Thursday. After that meeting, Kerry is scheduled to head to the West Bank for talks with Palestinian President Mahmoud Abbas. It said the American thinking is that if Israeli security concerns can be met, other issues, such as borders, will then fall into place.
One U.S. official said Allen "has been working closely on the ground with his Israeli counterparts." The official said the Americans realize that security is "paramount" as Israel contemplates taking "calculated risks for peace."
A U.S. official traveling with Kerry in Moldova on Wednesday said the ideas were not a "plan" that could be accepted or rejected. Instead, it was described as part of an ongoing effort to help ease Israeli security concerns. The official said many of the ideas have already been raised with the Israelis in prior meetings.
The officials refused to provide details on Allen's work, including whether it might include stationing international forces along the West Bank border with Jordan. Netanyahu has insisted that Israel maintain a security presence in the West Bank as part of any final deal.
Yuval Diskin, a former director of Israel's Shin Bet internal security service, gave a boost to Kerry's efforts, saying in a speech Wednesday that it is imperative that Israel reach a peace deal establishing a Palestinian state as soon as possible.
In a jab at Netanyahu, he said the continued occupation of millions of Palestinians presented a much bigger threat to Israeli security than the Iranian nuclear program. Netanyahu has made Iran his top priority.
"Now is the time to make decisions," Diskin told a gathering of peace activists in Tel Aviv.
He said the Jewish settler population is rapidly reaching the point of no return, where it will become impossible to remove them. That could lead to the establishment of a binational state in which Arabs ultimately outnumber Jews. In the meantime, he said Palestinian frustrations are rising, as evidenced by a string of unrelated attacks on Israelis in recent months.
"The concentration of fumes is so high that a little spark could lead to a big explosion," he said.
Mohammed Ishtayeh, a former Palestinian peace negotiator, said he resigned last month because the gaps with Israel were getting wider.
"We went to these talks to avoid the blame game, we know the result, there will be no result," he said. "Israel wants to annex the West Bank ... It wants to give us some local autonomy over the people and annex the land."
Israeli and Palestinian officials declined comment on Kerry's security plan, saying they had not yet seen any details.
But Ishtayeh said he had little faith in the American bridging proposals, saying the U.S. is unfairly biased toward Israel.
The Palestinians have begun to look to the international community's recent agreement with Iran as a model for solving the conflict with the Israelis.
Under that deal, six world powers offered Iran relief from economic sanctions in exchange for curbs on Iran's suspect nuclear program. The Palestinians believe that this model of international cooperation, as opposed to U.S. mediation, could provide the needed pressure to persuade Israel to make greater concessions.
"We have to find an alternative to the bilateral talks with Israel because it's not balanced, and the third party in these talks, the U.S., is making it unbalanced," Ishtayeh said. "We have alliances in the world, Russia, the United Nations, and we need to start demanding an international conference on Palestine."
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Lee reported from Washington. Mohammed Daraghmeh in Ramallah, West Bank, and Lara Jakes in Chisinau, Moldova, contributed to this article.