This is not complicated. Annex Judia and Sumaria, set declared boarders, give the rest to the Palestinians. No refugees, maybe some compensation, but finally firm boarders. Let the Palestinians declare a state, and if they cross the boarders declare a war. Really done thinking about it, just do it.
Law expanding definition of terrorist activity passes first Knesset reading (Haaretz)
from the article: Palestinian leadership divided over plan to seek UN recognition