Amid much speculation over US President Barack Obama's upcoming address to the Muslim world, reports published on Wednesday outlined the details of his Middle East peace plan, which are said to include a demilitarized Palestinian state.

The US president's initiative, which was formulated in consultation with Jordan's King Abdullah II during the two leaders' recent meetings at the White House, reportedly does not significantly stray from the pan-Arab peace initiative proposed in 2002. Rather, it bolsters certain details within the Saudi-proposed plan.

The Obama-Abdullah plan was put together in response to concerns from both Israel and the US that the Arab plan was too general and intransigent, and according to a report in Wednesday's Yediot Ahronot, will call on Arab countries to take trust-building measures in order to clear the air with Israel.

Obama is expected to present the initiative in an address to the Arab and Muslim world from Cairo in three weeks, and set out conditions for a demilitarized Palestinian state, with east Jerusalem as its capital, within the next four years. Yediot reported that Obama's vision for an independent, democratic and contiguous Palestinian state would not have its own army and would be forbidden from making military agreements with other states, in order to provide for Israel's security.

The matter of borders would be solved with territorial exchanges between Israel and the Palestinians, and the Old City of Jerusalem would be established as an international zone.

The initiative would require the Palestinians to give up their claim of a "right of return," according to Yediot, and Europe and the US would arrange compensation for refugees, including foreign passports for those residing abroad.

Obama's plan would also promote holding simultaneous talks between Israel and the Palestinians, and Syria and Lebanon. Yediot said that when such talks come to an agreement on Palestinian statehood, diplomatic and economic relations would be established between Israel and Arab states.

The report added that in his Cairo address, Obama would reiterate calls for Israel to cease all settlement construction.

Reports of the US president's new initiative came days after his meeting with Prime Minister Binyamin Netanyahu in Washington. During the premier's visit, Obama emphasized his commitment to a two-state solution. Netanyahu reiterated his goal to live side-by-side with the Palestinians, though he did not specifically mention a two-state solution.