The Palestinian leadership presented an offer to American mediators – that Israel release 1,000 more prisoners, of the Palestinian Authority’s choosing and in exchange, peace talks would be extended until the end of 2014. Palestinian Authority President Mahmoud Abbas also demanded that Israel freeze settlement construction and transfer some Area C regions to the Palestinian Authority’s control.

The Palestinian Authority was holding intensive talks Sunday to discuss the matter further.

On Saturday, The Times of Israel learned from a Palestinian source that Jerusalem, backed by Washington, offered to release 400 more prisoners of Israel’s choosing, in addition to a fourth and final group of longtime terrorism convicts who were set to go free this weekend – on the condition that the Palestinian Authority agrees to prolong the ongoing negotiations beyond the April 29 deadline.

Palestinian chief negotiator Saeb Erekat, who has resigned several times since peace talks started up again in July under US mediation, said Sunday that he was still holding talks with Jerusalem and Washington, far from the public eye.

On the prisoner release that was meant to take place Saturday, Erekat said it might still be carried out, as Israel was obligated to release inmates imprisoned before the Oslo Accords.

Erekat stressed that Abbas was making every effort to secure the prisoners’ release independent of any agreement to extend the talks. In return, the Palestinians would continue to abide by their obligation to refrain from applying to UN and other international bodies for the duration of the talks.

On Saturday, some sources claimed Israel was holding off on freeing the prisoners because of rumors that the PA would back out of peace talks once the fourth group of convicts was released. Israel has also balked at releasing Israeli Arabs.

As of Saturday evening, however, Abbas was insisting that the prisoners be released before he would consider extending the talks beyond their current deadline.

Saturday’s offer had stipulated that Israel would determine which additional 400 security prisoners would go free, Palestinian sources said.

Israel is said to be holding close to 5,000 Palestinian security prisoners.

Jewish Home’s Uri Ariel, the minister of housing and construction, was said to be ready to recommend that his right-wing party leave the coalition if the release of the extra prisoners goes through.

Transportation Minister Yisrael Katz, a member of Netanyahu’s own Likud party, told Israel Radio Saturday night that he was against the release of all further prisoners, and that moves to free them should be stopped immediately, particularly “since there hasn’t been any forward movement in the peace process.”

The Minister of Prisoners in the PA, Issa Karake, on Saturday night urged Abbas to leave the negotiations and instead take the cause of Palestinian statehood to the UN and other international organizations if Israel does not release the fourth group of prisoners within the next few days.

State Department Spokeswoman Jen Psaki said Saturday night, “In regard to reports this evening on an agreement on the release of prisoners, no deal has been arrived at, and we continue to work intensively with both sides. Any claims to the contrary are inaccurate.”

Meanwhile, US Special Envoy for Israeli-Palestinian Negotiations Martin Indyk met with Erekat and Israel’s envoy to the peace talks, Yitzhak Molcho, in Jerusalem Saturday night. Erekat was quoted by Army Radio saying he believed the deadlock would be broken and the fourth group of prisoners would go free early in the coming week.

Earlier Saturday, it was reported that Prime Minister Benjamin Netanyahu has told US Secretary of State John Kerry that he feared his coalition could fall apart if Israel frees the fourth batch of Palestinian prisoners who were slated for release this weekend — among them 14 Israeli Arabs.

Citing sources in the Palestinian Authority, the London-based pan-Arab al-Hayat newspaper reported that US negotiators had told Abbas Netanyahu feared his coalition, which includes the right-wing Jewish Home and Yisrael Beytenu parties, might disintegrate over the prisoner release.