JERUSALEM - Washington is pushing a plan to restart Israeli-Palestinian peace talks that foresees reaching a final deal in two years and agreeing on permanent borders in nine months, a daily said Monday.

Israelis from Jewish settlements in the West Bank protest against their government's settlement freeze policy in front of Israeli Prime Minister's office. A daily said that Washington is pushing a plan to restart Israeli-Palestinian peace talks that foresees reaching a final deal in two years and agreeing on permanent borders in nine months. (AFP/Menahem Kahana) Under the plan, the Israelis and Palestinians will immediately start final status talks that were suspended during the Gaza war a year ago, Israel's Maariv newspaper reported, citing unnamed sources.

The paper said that Egyptian President Hosni Mubarak was expected to press Palestinian president Mahmoud Abbas to agree to the plan during a meeting later Monday in the Red Sea resort of Sharm el-Sheik.

There were no immediate comments on the report from Israeli, Palestinian, Egyptian or U.S. officials.

The Palestinians have demanded a full freeze on Israeli settlement activity before resuming negotiations.

Under the U.S. plan, the two sides will first discuss the issue of permanent borders, with a deadline of nine months for reaching an agreement, Maariv said.

The idea is to have an agreement on borders before the expiry of an Israeli moratorium on new settlement construction in the occupied West Bank, so Israel will start to build again only in those settlements that will be inside its borders under the final status agreement, it said.

Underlying the discussions will be the principle of a land swap that has figured prominently in past peace negotiations - Israel will keep its major settlement blocks in the occupied West Bank and the Palestinians will get land inside Israel in return.

"After reaching an agreement on borders, the sides will move on to discuss the other core issues: Jerusalem and refugees," Maariv said.

To entice both sides to agree to the deal, Washington is preparing letters of guarantee.

The Palestinians will get a letter guaranteeing that the two-year deadline will be final, with no delay. "If no agreement is reached, the Palestinians will request U.S. backing for their demand to receive an area equal in size to the territory under Arab rule prior to 1967," Maariv said.

The Israelis will receive a note ratifying a letter that former U.S. president George W. Bush wrote to then Israeli premier Ariel Sharon in 2004, in which he said that a final status agreement will be based on the principle of land swaps that will allow Israel to keep its major settlement blocs.

Arab diplomats in Cairo told AFP last week that U.S. President Barack Obama's administration was drafting letters of guarantee, but did not provide details.