Prime Minister Benjamin Netanyahu said on Monday he has been discussing with the United States the possibility of Israel annexing Jewish settlements in the occupied West Bank, drawing swift condemnation from Palestinian leaders.
Mr Netanyahu did not say how far discussions had gone regarding the annexation of some of the land that the Palestinians want for a future state - a move that would be certain to meet strong international opposition.
"On the subject of applying sovereignty, I can say that I have been talking to the Americans about it for some time," Mr Netanyahu was quoted by a spokesman of his right-wing Likud party as telling a meeting of its legislators.
Prime minister Netanyahu was referring to applying Israeli law to the settlements, a step tantamount to annexation. They are currently under the jurisdiction of the Israeli military that occupied the West Bank in a 1967 war.
There was no immediate confirmation from the White House on whether discussions on the subject had been held.
Some commentators suggested Mr Netanyahu's words may have been a move to placate right-wingers in his cabinet rather than a concrete plan.
But the statement stoked Palestinian anger already high over US President Donald Trump's recognition on December 6 of Jerusalem as Israel's capital.
Nabil Abu Rdainah, a spokesman for Palestinian President Mahmoud Abbas, said any annexation would "destroy all efforts to try and save the peace process".
"No one has the right to discuss the situation of the occupied Palestinian lands," Mr Abu Rdainah said from Moscow, where Mr Abbas was holding talks with President Vladimir Putin amid reports they may discuss new options for Middle East mediation.
Most countries regard the Jewish settlements in the West Bank as illegal. Israel disputes this.
Mr Netanyahu's comments to the legislators appeared, at least in part, to be an attempt to soften any political fallout within Likud over his decision on Sunday to block a bill proposed by several right-wing lawmakers to annex settlements.
A source at the prime minister's office said on Sunday that the bill was blocked in order to allow diplomatic efforts.
An Israel Radio political affairs commentator described Mr Netanyahu's comments as largely ideological in nature and said it was unlikely any practical steps would be taken in the near future.
The Likud spokesman did not mention any timeframe for an annexation. He quoted Mr Netanyahu as saying at the party forum that any change in the settlements' status must first be coordinated, "as much as possible" with the United States, Israel's main ally.
The Trump administration has been less critical than the Obama White House of Israeli settlement policy. But in an interview published on Sunday in Israel Hayom, a pro-Netanyahu newspaper, Mr Trump urged Israel to tread cautiously.
"The settlements are something that very much complicates and always have complicated making peace, so I think Israel has to be very careful with the settlements," Mr Trump said.
President Trump also voiced doubts about Palestinian and Israeli commitment to making peace.
Asked when he would unveil a promised new peace plan, Mr Trump said: "We are going to see what goes on. Right now, I would say the Palestinians are not looking to make peace, they are not looking to make peace. And I am not necessarily sure that Israel is looking to make peace."
US-brokered peace talks collapsed in 2014, with the settlement dispute one of the main factors behind their failure.
The announcement comes as Palestinian leader Mr Abbas holds talks with Mr Putin in Moscow in a bid to secure the Russian president's support following Washington's recognition of Jerusalem as Israel's capital.
Mr Abbas has refused any contact with Mr Trump's administration since Washington's recognition of Jerusalem as the Israeli capital at the end of last year. Mr Abbas is due to speak at the United Nations Security Council on February 20.
In 2016 Russia offered to host one-on-one talks without preconditions between President Abbas and Mr Netanyahu, but these never materialised.
In January, Russian Foreign Minister Sergei Lavrov estimated that chances of resuming direct talks between the two sides in the current situation were "close to zero".