Israel's hard-fought election campaign is throwing out a number of grand plans reminiscent of some of the treaties that carved up the Middle East in the 20th century, including a scheme to transfer Jewish-held areas of the West Bank to Israel in exchange for Arab-populated territories.

As well as extreme right-wing plans to redraw boundaries Ehud Barak, the Labour Party leader and current Defence Minister, has proposed digging a 30-mile tunnel between the blockaded Gaza Strip and the occupied West Bank, to allow Palestinians the territorial continuity they are demanding in any peace deal.

“The preferred way to do it would be to dig a tunnel that would be under Israeli sovereignty, but under totally free and unobstructed use by Palestinians,” said Mr Barak.

The election front-runner Binyamin Netanyahu, of the hawkish Likud party, has said that when he takes office he will make a point of enacting forcible regime change in Gaza to topple the Islamist leadership of Hamas, although he has stopped short of promising a state for their secular rivals, Fatah.

He has clashed with Tzipi Livni, the centre-right Kadima party leader and incumbent Foreign Minister, who wishes to explore the possibility of dividing Jerusalem to allow the Palestinians a capital in the city, sacred to both sides.

Perhaps surprisingly, Yisrael Beitenu, the hard-right nationalist party led by Moldavian-born Avigdor Lieberman, is in favour of allowing some of the Arab-dominated outlying areas of northern Jerusalem to become a Palestinian city, although it is unlikely to be enough to please the other side.

Mr Lieberman has also developed one of the most sweeping plans of all the schemes being put forward to tackle the endless crisis, and one that his supporters hope will also shore up Israel's demographics in favour of the Jewish population, which has a slower birth rate than the 20 per cent Arab minority.

That plan involves exchanging an area close to the West Bank, where tens of thousands of Arab-Israelis - descendents of Palestinian Arabs who stayed in their homes when the Jewish state was formed around them in 1948 - for two large Jewish settlement blocks in the West Bank, Ariel in the north and Gush Etzion to the south of Bethlehem.

The party also wants to consolidate a large settlement community east of Jerusalem called Maale Aduumim, effectively surrounding Arab East Jerusalem with Jewish settlements.

Mr Lieberman has referred to Israeli Arabs as the enemy within, with sympathies closer to their Palestinian brethren than Israel, and has even proposed forcing them to swear an oath of allegiance to the Jewish state.

Such ambitious plans - recalling the British redrawing of post-Second World War maps with green pencils - do not go down well with the Arab residents of Umm al-Fahm, at the heart of the so-called Triangle of Arab towns close to the green line dividing Israel from the West Bank.

“Lieberman wants to use transfer against Arabs but he has no right,” said Jamal Ighbariya, 42, an unemployed labourer in Umm al-Fahm, the second-largest Arab-Israeli town.

“How can someone who came here a few years ago from Russia use this argument against people here, whose grandparents lived here? Lieberman should go back to Russia.”

“This is racism,” said one of his friends chatting on the town's main street. “This is their education system, encouraging racism.”

Israeli Arabs already complain that the Jewish state treats them like second-class citizens.

Despite having a population of about 50,000, Umm al-Fahm has no hospital or courthouse of its own, and residents complain of having to travel to nearby Jewish towns to take advantage of basic government facilities. Despite those complaints, Arab Israelis are also not keen to be grafted on to the West Bank, where they believe their living standards would drop even farther.

“It's a better life here,” said Diaa Mohammed, 28, a housewife. “Women have no rights there,” said an older woman. “Everything over there depends on wealth and status.”

Mr Lieberman's faction may not be invited into the national unity government Mr Netanyahu is planning to form - senior Labour officials have already balked at sharing power with his party.

But Mr Netanyahu has extreme nationalists within his own ranks to contend with, and the more seats he wins, the more hardliners he will have to deal with from his own faction in the Knesset.

One of them, Moshe Feiglin, has suggested taking Israel's defence budget and using it to pay Palestinians up to $250,000 per family to leave for countries in the Gulf, Europe and the Americas. He cites surveys he said were carried out by Palestinian universities suggesting that up to 60 per cent of Palestinians are so dispirited by Israeli occupation and harsh living conditions that they want to get out.