In an interview with the Israel Hayom daily, Defense Minister Ehud Barak implied that the deadlock with the Palestinians cannot be sustained indefinitely. "It's better to reach an agreement with the Palestinians, but if that doesn't happen, we must take practical steps to start a separation," he said. "It will help us not only in dealing with the Palestinians, but also with other countries in the region, with the Europeans, and with the American administration - and of course [will help] us."
Barak's proposal is unlikely to be implemented, at least in the short term. Netanyahu has shown no interest in one-sided concessions, and his governing coalition is dominated by hard-liners who would be reluctant to embrace the plan. His office declined comment.
The 12 million people who live in Israel and the Palestinian territories are divided roughly equally between Jews and Arabs. Most experts believe the Arab birthrate is higher, and that if Israel does not give up control of the West Bank, Jews will no longer be a majority in areas under Israeli control. That would threaten Israel's twin goals of being a democracy and a Jewish state.
Dovish Israelis have cited this demographic argument for years as a key reason to pull out of the West Bank, which is home to 2.5 million Palestinians. Even Netanyahu, head of the nationalist Likud Party, has raised concerns about the demographic issue.
But on the ground, Netanyahu has continued to build up the settlements. More than 300,000 Israelis now live in Jewish settlements in the West Bank, in addition to 200,000 Israelis in east Jerusalem. The Palestinians claim both areas and the Gaza Strip, captured by Israel in the 1967 Mideast War, for their future state.
The Palestinians believe the continued construction on occupied lands is a sign of bad faith and say they will not return to negotiations without a settlement freeze. Netanyahu has rejected this demand, and says peace talks should resume without any conditions.
Barak has previously floated the idea of unilateral action, most recently in May. But in Monday's interview, he was far more detailed.
He said Israel would keep heavily concentrated settlement "blocs." These blocs, home to most of the settler population, are mostly near the frontiers with Israel proper. Barak also said Israel would need to maintain a military presence along the West Bank's border with Jordan.
The remaining settlers would be given financial incentives to leave, or be allowed to remain for a five-year "trial period," Barak said.
Barak, who was out of the country on Monday, did not explain why he decided to unveil his proposal now. A full version of the interview was to be published on Tuesday.