In an outline for a final peace deal presented to the United States, the Palestinians softened positions on refugees and offered Israel sovereignty over the Jewish Quarter of Jerusalem's Old City and parts of the Western Wall, according to a document obtained Monday by The Associated Press. 

The proposal, delivered to Secretary of State Colin Powell in Washington last week by visiting top Palestinian Cabinet Minister Nabil Shaath, was still a long way from Prime Minister Ariel Sharon's position that Israel will not relinquish any part of Jerusalem. 

In showing flexibility, the Palestinians apparently hoped to generate good will in the increasingly critical Bush administration. The outline adheres to long-standing Palestinian positions, such as seeking traditionally Arab east Jerusalem as capital of a Palestinian state, but softens some positions in writing. 

Israeli government spokesman Dore Gold said he wasn't aware of the proposal or whether the Americans had passed it on to the Israelis. However, he said discussing ideas for peace talks is premature. "Right now, the only realistic way we'll be able to proceed is once violence is vanquished," Gold said. 

The Palestinian proposal calls for "a fair and agreed upon solution" to the problem of Palestinian refugees, adopting the vague wording on the issue used in an Arab peace plan adopted earlier this year at an Arab League Summit in Beirut. 

In contrast to previous Palestinian negotiating documents, the plan does not specifically mention the "right of return" of some 4 million Palestinian war refugees and their descendants to former homes in what is now Israel. There is only an indirect reference — to a U.N. resolution that says Palestinian refugees wishing to return to their former homes should be able to do so. 

Borders between states of Palestine and Israel would be the lines of June 4, 1967, before Israel captured the West Bank, Gaza Strip and east Jerusalem, the proposal says, but adds that "sides can agree on minor modifications." 

The Palestinians officially long have insisted on the June 4 lines, though the idea of small land swaps isn't new. Former Israeli Prime Minister Ehud Barak had offered Israeli land near Gaza in exchange for some West Bank land in 2000. More recently, Israeli Transport Minister Ephraim Sneh suggested exchanging Israeli Arab villages near the West Bank for Jewish settlements. 

The proposal also addressed the divisive issue of Jerusalem, long one of the biggest obstacles to peace. It sought "an open city for all the people," but offered Israel sovereignty over part of the Old City. Two years ago, Barak and Arafat began discussing how to handle the holy sites of the Old City, but talks in the Egyptian resort of Taba broke off in January 2001 without agreement. 

Under the proposal Shaath gave Powell, "the Palestinian side will transfer sovereignty over the Jewish Quarter and the Wailing Wall ... to Israel, while Palestinians will maintain sovereignty over the rest of the Old City." 

The Wailing Wall is the exposed part of the Western Wall, which is a remnant of the biblical Second Jewish Temple destroyed in A.D. 70 and is the holiest site in Judaism. The area also is the third-holiest site of Islam and known to Muslims as Haram as-Sharif, or the Noble Sanctuary, the site from where Islamic tradition says the Prophet Muhammad ascended to heaven. 

The proposal also said: 

—A Palestinian state would agree to limit its possession of weapons. 

—The states of Palestine and Israel would agree not to participate in any military alliance against each other or allow their lands to be used as bases for attacks against each other. 

—A permanent connection will be made between the West Bank and Gaza Strip.