US President Barack Obama's new peace plan for the Middle East continues to unravel, ahead of it official presentation in Cairo, on June 4.

Official Palestinian Authority sources told Ynet Wednesday that following Jordan's King Abdullah's visit to Washington, as well as other visits to the US capital, they were given the impression that any new American peace plan would call for establishing a Palestinian state with Jerusalem as its capital.

The source stressed that the US official also assured them the new plan would include halting all settlement construction, as well as setting a clear timetable for the realization of the two-state solution and a commitment that the permanent peace agreement would be negotiated according to the understanding set by the Arab peace initiative.

The US plans to add "improvements" to the Arab peace plan: According to an early May report in London-based Arabic-language newspaper al-Quds al-Arabi, the revised plan will include reintegrating Palestinian refugees either in various Arab nations, or in the demilitarized Palestinian state, and Israel and the Palestinian Authority would agree to a land exchange.

The revised plan is also said to call for east Jerusalem to be made the new state's capital – with the Palestinian Authority's flag waving over it official institutions and the UN banner waving over the Old City and places sacred to Judaism, Islam and Christianity.

The US is also expected to demand Arab nations set a timetable to the normalization of their diplomatic relations with Israel – a step meant to encourage Jerusalem to take practical steps towards forming a Palestinian state.

Prime Minister Benjamin Netanyahu's visit to the US ended overnight, as he took off from Andrews Air Base en route back to Israel. Despite the differences noted on the Palestinian matter, sources in Netanyahu's entourage deemed the visit a success.

Netanyahu is expected back in Israel Wednesday afternoon.