The official says the request to have UNESCO recognize the village, Battir, was postponed indefinitely as a gesture to U.S. Secretary of State John Kerry, who is trying to restart peace talks. Kerry, who is meeting Israeli and Palestinian leaders this week, asked both sides to avoid provocative moves.
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The official spoke anonymously Wednesday because he was not authorized to brief reporters.
Palestinians hoped UNESCO recognition for Battir would help protect its lands and ancient irrigation system. They say it's threatened by the proposed route of Israel's separation barrier.
Also on Wednesday, Secretary of State Kerry said Israeli and Palestinian leaders are both committed to reviving peace talks, but he acknowledged that progress on the long-stalled negotiations would be tough.
Kerry, who held separate talks with both sides in May, said Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas wanted the peace process to move forward. This would be Kerry's fifth attempt to restart talks.
"I believe they believe the peace process is bigger than any one day or one moment, or certainly more important to their countries than some of their current political challenges," he told a news conference in Kuwait with Foreign Minister Sheikh Sabah Khaled al-Sabah.
"That is why both of them have indicated a seriousness of purpose. I would not be here now if I didn't have the belief this is possible," he said.
Kerry earlier met Kuwait's ruler, crown prince and foreign minister as part of a regional tour. He flies to Amman later on Wednesday and will meet separately with Jordan's King Abdullah, Netanyahu and Abbas during his two-day trip there.
There has been no public indication from the Palestinians that Abbas is prepared to drop his long-standing demand for a freeze in settlement construction before resuming peace talks.
Kerry said he did not want to set any deadlines for the peace process but called for progress before the United Nations General Assembly in September. Mistrust needed to be overcome, he said, to "avoid the disappointment and failures of the past."