Ramallah: An Israeli peace proposal has been rejected because it does not give way for a Palestinian start with Jerusalem as its capital, Palestinian President Mahmoud Abbas’ office said on Tuesday.

Abbas's spokesman, Nabil Abu Rdainah, told the official Wafa news agency Israeli Prime Minister Ehud Olmert's plan showed a "lack of seriousness".

Israeli negotiators offered their Palestinian counterparts a deal in which Israel would annex 7.3 per cent of the West Bank as part of a final peace deal.

In exchange, Israel would cede Israeli territory near the Gaza Strip that is equivalent to 5.5 per cent of the West Bank, and would open a passage to allow Palestinians to travel between the West Bank and Gaza.


"The Israeli proposal is not acceptable," Abbas's spokesman said. "The Palestinian side will only accept a Palestinian state with territorial continuity, with holy Jerusalem as its capital, without settlements, and on the June 4, 1967 boundaries."

The Israeli proposal was a "waste of time", he added.