Secretary of State John Kerry is reportedly offering Palestinian President Mahmoud Abbas the right to relocate 80,000 Arab refugees back into Israel under a proposed peace plan.
The so-called "right of return" for Palestinian Arabs living outside of Israel has long been a key sticking point in the peace process.
Israel maintains that a large influx of Palestinians would erase the nation’s Jewish identity.
Kerry is said to have proposed the 80,000 figure during his latest round of shuttle diplomacy in the region between the Israelis and Palestinians.
"Kerry's proposal on the return of refugees is the same proposal offered by former U.S. President Bill Clinton during Camp David peace talks held in the United States in 2000," a Palestinian official said according to China’s state run Xinhua newspaper.
Abbas is said to be demanding the right to relocate some 200,000 back into Israel proper, according to the report.
A State Department official declined to comment on the report but said that the issue of refugees is currently up for discussion.
"We are not going to be responding to every piece of speculation in the press. The talks are confidential for a reason," a State Department official familiar with the talks told the Washington Free Beacon. "I can tell you that all the core issues, including refugees, are currently being discussed, but I am not going to get into the specifics."