Israel has delayed a Cabinet vote to endorse annexation of settlement blocks in the occupied West Bank, which was scheduled for Sunday.
That was despite Israeli Prime Minister Benjamin Netanyahu’s promise to move quickly to legalise the outposts after US President Donald Trump released his long-awaited peace plan.
The plan, a 180-page document rejected by the Palestinians, advocates leaving settlements in occupied East Jerusalem and occupied West Bank in Israel’s hands despite much of the international community regarding them as illegal.
Mr Netanyahu said immediately after the plan was introduced that he would ask the Cabinet to advance the extension of Israeli sovereignty over most Jewish settlements and the strategic Jordan Valley.
The move would probably spark international outrage and complicate the White House's efforts to build support for the plan.
Tourism Minister Yariv Levin told Israel Radio that the Cabinet vote was not technically feasible because of preparations, including "bringing the proposal before the attorney general and letting him consider the matter".
But Mr Netanyahu's far-right Cabinet ministers immediately called for annexation.
"History is knocking at the door," Israeli Defence Minister Naftali Bennett, a patron of the settler movement, said as he urged Mr Netanyahu to annex all of Israel's settlements and snuff out any hopes for Palestinian independence.
"Now the campaign is moving from the White House to the Cabinet room in Jerusalem. Take everything now."
The US ambassador to Israel, David Friedman, on Wednesday took back comments that the Israeli government would be free to exercise annexation over occupied areas with settlements in the West Bank.
Mr Friedman said any plans for annexation would require a “US-Israel committee” to review them.
He also defended the plan from comparisons to apartheid in endorsing Israel security control and its upper hand in determining the timing of the Palestinian state.
“This is the farthest thing from apartheid,” Mr Friedman said. “What the plan contemplates is that the Palestinians will be able to govern themselves.”
The document also leaves all of Jerusalem inside the security barrier that lines its eastern flank with Israel, with a Palestinian state outside the wall, and its capital in the under-served Arab communities on the outskirts.
Mr Friedman, who was a key donor to the settlements, said the plan did not call for any change to prayer arrangements around the Haram Al Sharif, a key Jerusalem mosque compound that was also the site of ancient Jewish temples.
The compound has been often been a flashpoint of violence. Under a "status quo" agreement also involving neighbouring Jordan, Jewish prayer is prevented there, which is a source of frustration for some Israelis.
Mr Trump's peace plan proposed that "people of every faith should be permitted to pray" at the disputed site in Jerusalem's Old City.
But Mr Friedman described the statement as aspirational for now.
"The status quo, in the manner that it is observed today, will continue, absent an agreement to the contrary," he said.
"There is nothing in the plan that would impose any alteration in the status quo that is not subject to the agreement of all the parties.
"Having said that, as we point out, we would like the region to be more open and free with regard to the exercise of freedom of religion."
The Palestinians seek occupied East Jerusalem, which hosts some of the holiest sites in Islam and Judaism, as its capital of a future state.
The Palestinians in the Gaza Strip and the West Bank led a strike on Wednesday to protest against Trump´s Middle East plan.
Demonstrations took place in the streets and public squares of Ramallah, Nablus, Jenin, Hebron and Gaza, and other Palestinian cities.
Tens of thousands voiced their rejection of Mr Trump’s plan and supported Palestinian President Mahmoud Abbas’s decision to boycott the US administration.
The protesters held placards reading, "We will drop your deal and step on it", "Jerusalem is not for sale", and "Trump’s and Netanyahu’s deal will fall".
All Palestinian factions issued statements rejecting Mr Trump’s plan and condemning his administration for seeking to entrench the Israeli occupation of Palestinian territories.
Mr Levin, a senior member of Mr Netanyahu's Likud party, said the Palestinian state envisioned by the plan was "roughly the same Palestinian Authority that exists today, with authority to manage civil affairs," but lacking "substantive powers" such as border control or a military.
The White House had hoped to rally Arab countries around the plan, but so far reactions have been mixed.
Saudi Arabia and Egypt, key US allies, welcomed the effort and encouraged negotiations without commenting on the plan.
Jordan, which has a peace treaty with Israel, warned against any Israeli "annexation of Palestinian lands", reaffirming its commitment to an independent Palestinian state in the West Bank and Gaza with occupied East Jerusalem as its capital.
The head of the Arab League said on Wednesday that an initial study of the 50-page plan showed it "ignored legitimate Palestinian rights in the territories".
Ahmed Abou Gheit said the Palestinian response would be key in shaping a "collective Arab position" on the plan.
"Achieving a just and sustainable peace between the Israelis and the Palestinians depends on the will of both sides," he said.
"The peace plan announced by the US president reflected a non-binding US vision."
The Palestinian leadership will seek to gain Arab and international support towards their position and against the plan.
It called for an urgent meeting with foreign ministers of Arab countries on Saturday, at which Mr Abbas will present the position of "all Palestinians".
The meeting will seek to gain a united stance from the Arab League in rejection of Mr Trump’s plan, and any that contradictthe Arab peace initiative and international resolutions.
The Palestinian Authority will also head to the UN Security Ciuncil and General Assembly, and the EU, to gain a rejection of the plan and renew international commitment towards resolutions and the two-state solution in line with 1967 lines.
"Trump's plan is an assault on international law and on Security Council resolutions and on Palestinians' rights," Jamil Mizher, senior member of the Popular Front for the Liberation of Palestine, told The National.
“This so-called peace plan is even worse than the status quo because it seeks to legitimise the occupation under the guise of a peace plan, and they are delusional for wanting the Palestinians to be a part of that."
Osama Al Qawasmi, a spokesman for Fatah, said: “The Trump plan is nothing but a farce and the biggest political scam in history.”
"The plan, in short, proposes Jerusalem, land, peace and security for Israel, and it proposes for the Palestinians apartheid and occupation."
In the US, Democratic presidential candidate Elizabeth Warren blasted the plan as a “rubber stamp for annexation".
British Prime Minister Boris Johnson said on Wednesday that no Middle East peace plan was perfect, but the one put forward by Mr Trump should be considered by Palestinian leaders.
"No peace plan is perfect but this has the merit of a two-state solution," Mr Johnson told Parliament.
"It would ensure that Jerusalem is both the capital of Israel and of the Palestinian people."
The unveiling of the peace plan came as Mr Netanyahu and his main rival Benny Gantz visited Washington to meet Mr Trump.
On Wednesday, a Dutch district court threw out a case alleging war crimes against Mr Gantz, a former Israeli Armed Forces chief.
It was launched by a Dutch Palestinian who lost six relatives in an Israeli air strike on Gaza in 2014. The court said it did not have jurisdiction.
A civil case for damages was filed referring to universal jurisdiction rules by claimant Ismail Ziada.