U.S. President Barack Obama is expected to announce a diplomatic plan soon for renewal of the Middle East peace process.

A central feature of the plan, which will be presented to Prime Minister Benjamin Netanyahu and to Palestinian Authority President Mahmoud Abbas, will be a binding timetable for negotiations on the core issues involved in a final resolution of the conflict.

It may also be precluded by an easing of pressure for a building freeze in the settlements on the part of the Unites States.

A senior Western diplomat closely involved in current contacts involving the U.S., Israel, the PA and moderate Arab states noted that the American administration is currently developing the diplomatic plan but is only interested in pursuing it after the settlement issue and the matter of pro-Israel gestures from the Arab states are resolved.

The American plan will essentially restart negotiations between Israel and the Palestinians which have been deadlocked for over six months. The plan will not deal with all of the specific details of the negotiations and will not provide parameters for the resolution of core issues. Rather it will provide a framework for negotiations, how they will be conducted, follow-up mechanisms and especially the timetable for negotiations.

The senior diplomat said Obama is interested in bringing talks to a conclusion "on time" as a way of obligating the parties to make progress.

The diplomat also noted that the U.S. is now interested in reaching a compromise with Israel on the settlement issue as a prelude to presentation of the American plan, as the Americans have understood that Israel cannot agree to an absolute freeze in construction in the settlements.

The change in the American view on the issue was the result of the fact that about 2,500 homes in the settlements are in various advanced stages of construction which cannot be halted.

U.S. Mideast envoy George Mitchell is therefore attempting to find a formula by which Israel will go as far as it can to stop settlement building.

The shift in the American position is also the product of the refusal on the part of the moderate Arab states, led by Saudi Arabia, to make significant normalization gestures toward Israel. In all probability, when the Americans understood that in any event they would not obtain substantial gestures from the Arabs, they decided to reach a compromise with Israel.

The compromise will also include an agreement on a joint database between Israel and the U.S. which will permit close tracking of settlement construction and verification that it is being kept to a minimum.

The plan, according to the senior diplomat, would also include other Israeli confidence-building measures toward the Palestinians. The diplomatic source cautioned that the Arab world's total lack of trust in Netanyahu remained a major problem.