Israel is believed to be considering a peace deal under which construction in the West Bank would remain halted in return for the freeing of a Jewish American jailed by the US for spying in 1987.

A freeze on settlement building is due to expire on September 24 and Palestinian President Mahmoud Abbas has warned that he will leave the recently revived Middle East talks if it is not extended.

But Israeli media claimed that Benajmin Netanyahu’s office has discussed with American negotiators the possibility of Israel making certain concessions, including on settlement building, in return for the release of Jonathan Pollard.

The spy is serving a life sentence in a North Carolina prison for giving military secrets to Israel while working as an intelligence analyst in the US Navy. He is not due to be released until 2015 and a series of appeals have been denied.

Pollard claimed he spied because the US was withholding information crucial for Israel’s security. His continued imprisonment is a key cause for Israel’s right-wing.

Israel has not confirmed the reports.