Following the friendly meeting between Prime Minister Binyamin Netanyahu and President Barack Obama in Washington last week, Mr Netanyahu is putting together a list of gestures to the Palestinians that, he hopes, will convince the Palestinian leadership to enter direct negotiations.
The main concession will be to Palestinian demands to widen the responsibilities of its security forces in the West Bank. At the moment, the Palestinians have nominal security responsibility in the Area A in and around the main cities in the West Bank, but the IDF still operates there, mainly at night, when the Palestinian security personnel are confined to their bases.
The Palestinians are demanding that Israel cease operations altogether in their towns. They are also demanding an expansion of their activity in Area B, where they have civil responsibility. The PA would like to build new police stations in these areas.
Other concession being considered are a further reduction of the number of roadblocks in the West Bank and a possible extension of Area A in the West Bank, especially between Ramallah and the new Palestinian town of Rawabi.
Mr Netanyahu began discussing the concessions this week with his security advisers and the IDF General Staff. The concessions will be voted on by the inner cabinet of seven ministers and Mr Netanyahu is facing an uphill battle to convince his colleagues. Foreign Minister Avigdor Lieberman, who is leading the opposition, said last week that "we have given enough already, we are not going to make any new concessions".
For now, no-one in the government is discussing the future of the temporary freeze of settlement building in the West Bank, which will end in September. President Obama recognises the delicate coalition situation in Israel and did not exert any public pressure on Mr Netanyahu on this issue at the White House last week. Instead he said that he believed that direct negotiations would start before September and both sides would have an interest in allowing them to continue.
There has been little progress through the "proximity talks" which have taken place through American mediators over the last two months.
Meanwhile the Palestinians are resisting starting direct talks. Palestinian President Mahmoud Abbas, who spoke on the phone with President Obama after the White House meeting, said that "if there is no progress, what is the point of direct talks which will be empty of any real content or use?"
The Chief Palestinian negotiator, Saeb Arekat, said that the Palestinians are still demanding a total freeze on settlement activity as a condition for direct talks.
Pressure within Israel to renew building continues with a large-scale campaign by the Yesha Council, the representative organisation of the settlers, reminding the cabinet ministers of their promises to end the freeze in September. On Monday, the local Jerusalem planning council authorised 32 new flats in the east Jerusalem neighbourhood of Pisgat Zeev. The Prime Minister's Office re-iterated that there is no building freeze in Jerusalem, "just a policy of not announcing this building at sensitive junctures".
President Obama's emissary to the region, former senator George Mitchell, will return to Jerusalem next week in yet another attempt to get the two sides to sit down together.