News of a possible breakthrough came just 48 hours before a partial moratorium on Jewish residential building in the West Bank expires on Sunday evening, London's Telegraph reports.

A row over the extension of the settlement freeze has threatened to derail the negotiations, launched in Washington at the beginning of the month. Israel has refused to prolong the moratorium, while the Palestinian leadership had threatened to walk out of the talks if any Jewish construction on occupied territory resumed.

US begins new Middle East peace offensiveAmid growing US pressure on Benjamin Netanyahu to find a mutually acceptable solution, one of his officials hinted that the Israeli prime minister was prepared to cede more ground to the Palestinians than previously stated. "Israel is prepared to reach a compromise acceptable to all parties," the official was quoted as saying. Without providing details of any new offer, the official insisted that "there cannot be zero construction".

Both Mr Netanyahu and Mahmoud Abbas, his Palestinian counterpart, have softened their positions in recent days though it is far from clear whether the gap between them can be bridged in time to save the talks.

Read the entire story at Telegraph.co.uk