The United States has offered Israel a package of incentives in exchange for a settlement construction freeze in the West Bank.
Under the reported plan, Israel will stop construction for 90 days in the West Bank but not in east Jerusalem.
In return, the United States will offer Israel various security guarantees and commits itself to fighting international resolutions critical of Israel.
The settlement row threatens to derail direct Israeli-Palestinian peace talks, which resumed in the United States in September after a break of almost 20 months.
Israel and the United States have not commented on the details of the plan.
News agency reports say the plan was discussed when the USA Secretary of State, Hillary Clinton, met Israeli Prime Minister, Benjamin Netanyahu, in New York on Thursday.