Palestinian negotiators secretly told Israel it could keep swathes of occupied East Jerusalem, according to leaked documents that show Palestinians offering much bigger peace concessions than previously revealed.

The documents, obtained by the Al Jazeera television channel, could undermine the position of Palestinian President Mahmoud Abbas, whose public declarations about Jerusalem are at odds with what his officials were promising in private.

Equally sobering for the Palestinian people, who want to create a state on land Israel seized in a 1967 war, is the fact that Israel offered nothing in return for the concessions and turned down their offer, saying it did not go far enough.   

The leaked minutes of a 2008 meeting between Palestinian, US and Israeli officials showed a senior Palestinian proposing that Israel annex all but one of its major Jerusalem settlements as part of a broad deal to end their decades-old conflict.   

Al Jazeera said on Sunday it had other documents that it would publish shortly showing the Palestinians were also ready to make other massive concessions on the hugely sensitive issue of the right to return for Palestinian refugees.

Chief Palestinian negotiator Saeb Erekat went on the defensive, dismissing the documents as 'a bunch of lies' during an appearance on Al Jazeera shortly after they were released.

In a heated exchange, Erekat was confronted by critics including Abdel Bari Atwan, editor of the London-based al -Quds al-Arabi newspaper, who asked him who had authorised him or the Palestinian leadership 'to give up Islamic holy sites'.   

One document quoted Erekat as telling an Israeli official: 'It is no secret that ...we are offering you the biggest Yerushalayim in history.' He used the Hebrew word for Jerusalem.   

Ahmed Qurie, the lead Palestinian negotiator in 2008, was quoted as proposing that Israel annex all Jewish settlements in Jerusalem except Har Homa. He also said Israel could keep control of a part of the Old City of Jerusalem.

'This is the first time in history that we make such a proposition,' the document quoted Ahmed Qurie as saying. He added that the Palestinians had refused to make such a concession during negotiations led by the late Palestinian President Yasser Arafat in 2000.

Hamas, the Islamist group which governs the Gaza Strip, said the documents revealed the Palestinian Authority's role in 'attempting to liquidate the Palestinian cause'.

'This exposes the Palestinian leadership, putting it in a position where it will be impossible to win the confidence of the people,' said Zakaria Al-Qaq, Palestinian commentator.   

However, another Palestinian commentator said the reaction would be limited.  'There won't be any big reaction, it's not entirely new,' said Hany Al-Masri, adding that the idea of Israel keeping its large urban settlements around Jerusalem as part of a land exchange in a final deal had been floated before.    

Israel has always said it would keep the main settlement blocs around Jerusalem, but the Palestinian leadership has adopted a tougher stance in its public declarations, never letting on it was ready to make such ground.

Abbas said as recently as last week the fate of Jerusalem was not up for discussion. 'From our perspective, there are no negotiations over Jerusalem. Jerusalem is ours,' he said.

However, he has also made clear that West Jerusalem was Israeli and could be the capital of the Jewish State.

Israel captured East Jerusalem in a 1967 war, annexing the walled Old City and a belt of surrounding West Bank land shortly after the conflict in a move that has never won international recognition. Both sides want Jerusalem as their capital.

The 2008 transcript was one of some 1,600 documents related to the Israeli-Palestinian peace process that the Qatar-based channel said it had obtained in recent months from a variety of sources. Britain's Guardian newspaper had early access to the documents and said it had verified most of them. - Reuters