The Israeli cabinet will ask re-elected US President Barack Obama to refuse the Palestinian request for a diplomatic UN upgrade.

Palestinian Authority President Mahmoud Abbas is scheduled to address the United Nations General Assembly at the end of the month. Sources say he will ask the UN to upgrade Palestinian status to that of permanent observer-state.

According to recent assessments, if the Palestinians win the UN vote, they will use it to apply for membership of the International Criminal Court in Hague and file a legal petition against senior Israeli officials.

Israel is considering a settlement building drive in the West Bank as a possible sanction. A senior Israeli official said today that the cabinet might legalise dozens of outposts set up by Israeli settlers in the West Bank.