Support among Palestinians for a binational state with Israel will grow should U.S.-brokered talks on creating an independent Palestine fail, a Palestinian think tank forecast in a new report released on Wednesday.

Israel has long rejected the idea of becoming a binational country, in which Jews would lose their majority. Palestinian President Mahmoud Abbas has said he remains committed to a two-state solution despite slow-moving negotiations.

A 50-page document, formulated by the Palestine Strategy Studies Group (PSSG) and titled "Palestinian Strategic Options to End the Israeli Occupation", noted Palestinian frustration over Jewish settlement expansion in the occupied West Bank.

"If the current negotiations fail, Palestinians will be driven to replace the 1988 (two-state solution) offer (by the Palestine Liberation Organization) by a new strategy, not just rhetorically but in reality," the report said.

"The negotiated two-state outcome will then be definitely cancelled," it added.

The PSSG is made up of 30 Palestinian intellectuals and professionals from the West Bank, the Gaza Strip and the diaspora. The study was funded by the European Union.

The document has sparked a debate within the Palestinian society on the next steps to be taken should negotiators fail to meet Washington's goal of achieving at least a framework peace deal by the end of the year.

Palestinian negotiators have said that Israeli proposals fall short of Palestinian aspirations for a viable state on lands Israel captured during the 1967 Middle East war.

Abbas plans to meet U.S. President George W. Bush on September 26 on the sidelines of the U.N. General Assembly session in New York, Palestinian Information Minister Riyad al-Malki said on Wednesday.

OPTIONS

"We must be prepared with options and scenarios," Palestinian writer Hani al-Masri, a member of the PSSG, told Reuters.

"The document lists a number of options, including a binational state. It doesn't say the two-state solution must be ruled out but it says that the two-state solution is being eradicated by settlements and Israeli facts on the ground," Masri said, referring to the Jewish enclaves on occupied land.

The Palestinian leadership has also started debating options if no deal is reached.

Senior Abbas aide Yasser Abed Rabbo said one possibility under discussion was a unilateral declaration of independence.

The idea caused an international uproar in 1999 when then-Palestinian leader Yasser Arafat threatened to declare statehood in the West Bank and Gaza Strip.

"The entire Palestinian discourse must change. Our aim is to end the occupation and not have a process without peace," Fatah official Mohammad Ishtayeh, a member of the PSSG, told Reuters.

Another PSSG member, Samir Abu Eisheh, a former cabinet minister close to the Islamist Hamas group that controls the Gaza Strip, said options included placing that territory and the West Bank under international trustreeship.