"Israel is practicing a policy of blackmail and linking its agreement to releasing the fourth batch of prisoners with the Palestinians accepting to extend the negotiations," the official said following a late-night meeting between the two negotiating teams.

"Israel made a proposal which was refused by the Palestinians," the official said, describing the proposal as "weak".

"The proposal includes a partial settlement freeze in the West Bank but excludes (annexed) east al-Quds, and would include continued building in areas where tenders have already been published," he said.

The official said Israel is trying to string out the negotiations indefinitely while continuing to build facts on the ground.

"The Israeli proposal aims to continue the negotiations indefinitely, without any results, in parallel with continued settlement building," he charged.

"It's a very difficult situation and the peace process is in real danger because of Israeli policy."

Meanwhile, Washington has been trying to induce the two sides to accept a framework proposal that would extend the talks beyond the deadline.

The US-sponsored talks are teetering on the brink of collapse over a dispute about the fate of 26 Palestinian prisoners held in Israeli jails.

The inmates were supposed to be released this weekend under the original terms agreed to relaunch the so-called peace talks between the Palestinian Authority and Tel Aviv. But Israel informed Palestinians on Friday that it would not release the prisoners.

On March 25, Palestinian Authority Acting Chief Mahmoud Abbas blamed Tel Aviv for sabotaging talks, saying that the Israeli regime is not willing to end its occupation of Palestinian territories.

In his speech at the 25th Arab League summit in Kuwait, Abbas said Tel Aviv has been adding new demands during the negotiations, including the recognition of Israel as a "Jewish state" and the continuation of its settlement expansion plans.

RA/NJF