RAMALLAH, Feb. 13 (Xinhua) -- The Palestinians are considering upgrading their UN status to a non-member observer state after failing to obtain state recognition through the world body's Security Council, sources close to the leadership said on Monday.

However, the Palestinians' decision will depend on Israel's response to a letter sent by President Mahmoud Abbas via some Arab leaders, the sources said.

The letter expounds the definition of references for peace negotiations between Israel and the Palestinians, which broke down in 2010 due to differences on the Jewish settlement activities in the West Bank and east Jerusalem, where the Palestinians wish to build their future capital.

On Sunday, Abbas told the Arab ministers at a meeting that the references for talks include Israel's recognition of the two-state solution according to the 1967 lines, a freeze on Jewish settlement activities and the release of Palestinian prisoners held in Israel.

Upgrading the Palestinian status through the UN General Assembly will be the first step the Palestinian leaders would take if Israel responds negatively to Abbas' letter, said the sources.

"The messages will be the final Palestinian bid to demonstrate their commitment to negotiations," the sources told Xinhua, adding that Abbas said the Palestinians will continue their efforts to obtain an international recognition of a Palestinian state if Israel fails to respond to the letters.

The sources also said the Palestinian leaders are set to meet on Saturday to discuss possible paths leading to future peace process.

The Palestinians' UN membership bid failed late last year when the Security Council voted against their application. However, they were granted membership by the world body's cultural organization UNESCO, a victory hailed by Palestinians but cautioned by Israel.

In the General Assembly, the Palestinians may have enough votes to upgrade their status, but this remains closer to a symbolic recognition than a real one.