President Donald Trump is ready to accept a Palestinian state as part of his Middle East peace plan with borders "not necessarily" based on pre-1967 lines, an Israeli TV channel report has claimed.

Hadashot News (formerly Channel 2 ) said recognition of a Palestinian state would involve land swops with Israel - but would not include evacuation of West Bank settlements under a permanent accord.

Quoting what it claimed were senior Israeli negotiators currently involved in discussions with the Trump administration, the report suggested Sunni states such as Saudi Arabia would provide massive economic assistance for the plan in order that it was accepted by the Palestinian leadership.

It is also claimed that the US would continue to recognise Israeli security needs including the continued presence of troops along the border with Jordan.

The report - which has been dismissed as "speculative" by both the White House and by the Israeli Prime Minister's office said the deal could be proposed in a few months time but not next month.

PM Benjamin Netanyahu has reportedly told his ministers that President Trump is a true friend of Israel and that his country cannot afford to reject the forthcoming peace proposal.

Latest claims about the nature of the peace proposal follow last week's report by Israel's Channel 10 TV station that Saudi Arabia had told Palestinian President Mahmoud Abbas to accept the peace deal or resign.

There was also a report on Sunday that Dina Powell, a former Goldman Sachs banker, had emerged as the Trump administration's key player in brokering a deal between Israel and Palestine.