The original proposal would have put the Palestinians, who live in the area of the Jewish settlement of Ariel, on the "Israeli" side of the barrier, officials said.

Interim Prime Minister Ehud Olmert says he wants the barrier concluded by the end of the year. He decided last week to erect a temporary security barrier around Jerusalem to protect Israelis in areas where the permanent barrier has not yet been completed.Israeli left-wing organisations accused Olmert of trying to bypass the Supreme Court, where dozens of Palestinian petitions against the barrier are pending.

Israel says the separation barrier, which dips into the West Bank at several points, is meant to provide security by preventing suicide bombers from entering the country. Palestinians call it a land grab.