JERUSALEM — The Olmert government has proposed a peace deal whereby Israel would keep West Bank settlement blocks and the Palestinians get Negev land in compensation.Israeli Prime Minister Ehud Olmert, who is trying to hammer out an accord before he leaves office, presented Palestinian Authority President Mahmoud Abbas with his ideas this week, Haaretz reported Tuesday.

Under the proposal, which was leaked to the newspaper, Israel would keep West Bank settlement blocs, turning the security fence into a border and evacuating settlers east of it. For what would be, effectively, an annexation of 7 percent of  West Bank land, Israel would allow for a parcel of Negev land to be annexed to the Gaza Strip.

The Negev land would be equivalent to 5.5 percent of West Bank land but the shortfall would be made up for by a road connecting Gaza and the West Bank, allowing for free Palestinian passage between the territories.

According to Haaretz, the Gaza annexation would only take place after Abbas’s reestablishes his authority over the territory, ending Hamas rule there.

The Palestinians have indicated their willingness to enter territorial exchanges, but other, salient disputes remain.

Both sides want sovereignty in Jerusalem, which Israel has vowed to keep as its undivided capital. According to Haaretz, Olmert and Abbas agreed to defer the Jerusalem issue to future negotiations.

Israel has also demanded that the future Palestinian state be demilitarized, while the Palestinians want an armed force capable of defending against "outside threats," Haaretz reported.

According to the newspaper, Olmert’s proposal includes a "detailed and complex formula" for solving the issue of Palestinian refugees. Israel wants the refugees resettled in a future Palestinian state while the Palestinians want them to be granted a "right" to land now in the Jewish state.

U.S. Secretary of State Condoleezza Rice will visit Jerusalem and Ramallah next week to try to help progress in the Israeli-Palestinian peace talks.