Palestinian officials denied Thursday reports claiming that they were willing to freeze their statehood bid at the United Nations if Israel handed over tax collection funds it had withheld over the Palestinian Authority's acceptance into the UN's educational panel.

On Wednesday, a European diplomat said that the PA offered the United States a deal, saying it would freeze all moves to achieve full membership for "Palestine" in various UN agencies until the end of January, while the United States and Israel would resume transferring it funds.

Prime Minister Benjamin Netanyahu's special envoy Isaac Molho reportedly met secretly in London on Tuesday with U.S. administration representatives David Hale and Dennis Ross to discuss the suggestion.

However, speaking to Palestinian news agency Ma'an on Thursday, chief PA negotiator Saeb Erekat called the report "nonsense," saying that the Palestinians were determined to apply for membership."

"We should stop dealing with Israeli propaganda," Erekat said, adding that the "Palestinian government is still focusing on getting support from the Security Council."

Ma'an also recorded the response of top PLO official Hanan Ashrawi, who called the report "completely untrue, and the Israeli media tools are not the source of information for the Palestinian positions and decisions."

"The report is a new Israeli maneuver and an attempt to create confusion to stop the Palestinian bid to the UN," she said.

According to a European diplomat whom the PA had updated about the proposal, the PA plans to complete the process of trying to get full UN membership for Palestine recognized by the Security Council.

PA President Mahmoud Abbas is expected to ask for a vote by the end of December, although the move is doomed to defeat. Even if the Palestinians muster enough votes, the United States will veto it.

Other than that, however, the Palestinians are prepared to suspend their efforts to achieve full membership in such agencies as the World Health Organization and the World Trade Organization, the diplomat said. Nor will they ask the General Assembly to upgrade their observer status to non-member observer state.

Though the Palestinians offered to temporarily suspend these UN efforts, if a deal is struck that restores the PA's cash flow, it is thought such moves will be stopped for the foreseeable future.

Israeli sources confirmed that Molcho had met with the U.S. officials in London, while a British source said Molcho also met with a senior Arab figure.