Israel is considering pursuing an interim peace agreement with the Palestinians, a senior official said on Tuesday, signalling the government might abandon efforts to secure a single, comprehensive accord.

The official, who declined to be named, said Israeli Prime Minister Benjamin Netanyahu might seek a "phased path" towards a permanent deal rather than a treaty that resolved all the core issues as envisaged by the United States and European allies.

"Obviously Israel would prefer a final-status agreement but the consistent Palestinian refusal makes that difficult," the official said.

U.S.-brokered talks between the two sides broke down last year after Netanyahu refused to extend a partial freeze on Jewish settlement building in the occupied West Bank.

The Palestinians have said an interim deal would just be a way for Israel to keep its hold on occupied land. Saeb Erekat, a senior aide to Palestinian President Mahmoud Abbas, rejected the notion of any non final resolution.

"This talk about interim agreement and 'phased path' is just a reflection of the fact that we don't have a partner for the end game in this Israeli government," Erekat said.

Israeli officials have long argued that an interim deal spread out over many years would be easier to conclude than negotiating a single treaty that dealt with all the difficult, core issues such as the status of Jerusalem.

Analysts say this staggered approach would involve offering Palestinians the chance to establish an independent state in part of the West Bank and in the Gaza enclave, with the possibility of extending their territory at a later date.

The Israeli official declined to give any details of the diplomatic initiative Netanyahu was weighing.

But Israel's Foreign Minister Avigdor Lieberman has chartered his own plan outlining temporary borders for a Palestinian state on about half of the West Bank captured by Israel in the 1967 Arab-Israeli War, falling far short of Palestinian demands.

Israel has been worried about its growing international isolation and last month narrowly escaped a U.N. Security Council resolution condemning settlements as illegal after the United States vetoed the draft which all other members endorsed.

Israeli daily Haaretz reported last week that Netanyahu was scolded by German Chancellor Angela Merkel for "not taking a single step" to advance the peace process. Netanyahu told Merkel he would soon present a new peace plan, the report said.

EU foreign policy chief Catherine Ashton on her last visit to Israel and the Palestinian Territories in January urged both sides to resume final status talks, adding there was "no alternative" to a negotiated resolution to the conflict.