U.S. and Israeli officials say their two countries are working to revive peace negotiations with the Palestinians in a last-minute attempt to break the impasse in talks and avoid a diplomatic showdown at the United Nations next month.

State Department spokesman Mark Toner said Tuesday the United States is “working hard with both parties to find a way back to the negotiating table” before the Palestinians ask the U.N. in September to recognize their independence.

The Associated Press quotes an Israeli official as saying the two allies have been trying to devise a “package” that would allow talks to resume, and persuade the Palestinians to call off the U.N. initiative.

On Monday, sources in Israeli Prime Minister Benjamin Netanyahu's office said he had agreed to negotiate the borders of a future Palestinian state using the 1967 cease-fire line that delineates the West Bank as a starting point for talks.

In revealing the dramatic policy shift, officials said that in order to restart direct peace negotiations with the Palestinians, Mr. Netanyahu would be willing to discuss a proposal containing a formula on borders “that would be difficult for Israel to accept.”

They said Mr. Netanyahu made clear that Israel will not return to the borders it had before the 1967 Six-Day War. Officials said demographic changes that have taken place since then – the expansion of Jewish settlements in the West Bank – must be taken into account.

The Israeli sources also said that in exchange for the concession, Palestinians must recognize Israel as a Jewish state and retract the unilateral application for statehood likely to be submitted to the U.N. next month.

Palestinian officials said they have not received such a proposal from Israel.

Earlier this year, U.S. President Barack Obama proposed negotiations based on the pre-1967 borders, plus agreed swaps of territory between Israel and a Palestinian state.

Western-sponsored peace negotiations broke off just weeks after intensive efforts to renew them last September, in a dispute over Jewish settlement building in the West Bank.

Palestinians have demanded that Israel stop all settlement construction before peace talks resume. Mr. Netanyahu wants negotiations with no preconditions in which issues like borders and settlements would be discussed.

Most of the world considers the 1967 line to be a legitimate frontier, while Israel has always insisted it is just a temporary truce line that does not dictate the location of the border.