Breaking an old taboo, Israel's new government is drawing up plans to divide the holy city of Jerusalem by giving up Arab neighborhoods, an architect of the program said.

Still, Israel would keep Jerusalem's Old City with its shrines sacred to Jews, Muslims and Christians alike — an unacceptable plan to Palestinians, particularly if carried out unilaterally.

Otniel Schneller, in interviews with The Associated Press this week, outlined the government's plan to separate from the Palestinians and draw Israel's final borders by 2010, providing the clearest indication yet of what Jerusalem is likely to look like and how Israel plans to abandon much of the West Bank.

Schneller cautioned that the ideas are still in the planning stages, require international backing and that there's no clear timetable for carrying them out.

Under the plan, which would be executed unilaterally if efforts to resume peace talks fail, Jerusalem's Old City, its holy shrines and the adjacent neighborhoods, would become a "special region with special understandings," but remain under Israeli sovereignty, said Schneller, a lawmaker in Prime Minister Ehud Olmert's Kadima Party.

Since Israel captured east Jerusalem from Jordan in the 1967 Mideast War, Israelis had been in broad agreement that the city could never be divided again. The idea of giving up Arab neighborhoods was first brought up in 2000 peace talks, but it failed to materialize. Schneller's blueprint is reviving it.

With Olmert determined to draw Israel's borders, likely without waiting for Palestinian agreement, a division of Jerusalem looks realistic for the first time.

Olmert's withdrawal plan involves dismantling dozens of Jewish settlements with tens of thousands of people and moving them to larger West Bank settlement blocs that Israel hopes to hold onto under a final peace deal.

Israel has said it will give the new Hamas-led Palestinian government time to agree to international demands to recognize Israel, accept past peace deals and renounce violence. More than a month into its reign, Hamas has rejected the demands, Israel has cut off all ties with what it has labeled an enemy entity and it appears increasingly likely the Jewish state will draw its borders on its own.

"The continuation of the scattered settlements throughout the West Bank creates an inseparable mix of populations that will threaten the existence of the state of Israel as a Jewish state," Olmert told parliament as he presented his government on Thursday.

If necessary, "we will also act without the Palestinian Authority's agreement to reach an understanding that will first and foremost be based on the correct definition of Israel's borders," Olmert said.

That's a position hotly rejected by the Palestinians, who say the result will be a truncated territory on which it will be impossible to build a viable state.

"President Mahmoud Abbas refuses to accept any unilateral steps and rejects any provisional solutions," said Nabil Abu Rdeneh, a senior spokesman for the moderate Abbas, who still wields considerable power as president even though Hamas took over the parliament and Cabinet.

The U.S. has long held the position that "borders and Jerusalem and all final status issues ... ultimately have to be decided in negotiations between the parties," U.S. Embassy spokesman Stewart Tuttle said.

But Washington is not likely to oppose unilateral Israeli pullouts from the West Bank.

Jerusalem is one of the thorniest issues in the Israeli-Palestinian conflict, and was a key reason the sides failed to make peace during the so-called Camp David peace talks in 2000. Both sides claim the city as their eternal capital.

Moshe Amirav, a Jerusalem expert who participated in the Camp David talks, said Olmert's plan is almost identical to the deal that was formulated at the negotiations feverishly mediated by then-U.S. President Bill Clinton.

The plan currently would give most of Jerusalem's Arab neighborhoods, including a-Ram, Anata, Abu Dis, Tsur Baher and Jabel Mukaber, to the Palestinians, while keeping the predominantly Jewish areas for Israel.

"Those same neighborhoods will, in my assessment, be central to the makeup of the Palestinian capital ... al-Quds," Schneller said, calling Jerusalem by its name in Arabic. "We will not divide Jerusalem, we will share it."

Olmert has said the 460-mile separation barrier Israel is building in the West Bank will roughly serve as the border, with some alterations.

In Jerusalem, however, the route of the barrier would have to be changed if the Schneller plan is implemented. The barrier is currently enveloping all of Jerusalem on the Israeli side.

Under the future blueprint, the Old City and the adjacent "holy basin," which includes the predominantly Arab neighborhoods of Silwan and Sheik Jarrah, would still fall on the Israeli side of the barrier, another Israeli official said, speaking on condition of anonymity because plans have not been finalized. However, most Arab neighborhoods of Jerusalem could become part of a future Palestinian state on the eastern side of the barrier, the official said.

Schneller said the current route of the barrier's Jerusalem segment was dictated by security needs.

"The barrier today has to provide security to Jerusalem and to everyone else in Israel ... Whether the barrier will remain in the same place as it is now, the answer is, in some places yes, in other places, no," said Schneller, who participated in the Camp David negotiations as a consultant to then-Prime Minister Ehud Barak.

The barrier, as now planned, puts some 9.5 percent of the West Bank inside Israel, including the Jewish settlement blocs and other areas Israel considers to be strategically important.

Schneller, himself a West Bank settler from the community of Maaleh Michmash, would not detail which settlements or how many settlers would be evacuated under Olmert's plan — although he said it would be fewer than the 70,000 settlers Israeli media had speculated on.

Schneller said Israel plans to hold on to two main settlement blocs near Jerusalem, Maaleh Adumim and Gush Etzion, and the large Ariel settlement bloc jutting deep into the West Bank. In addition, Israel plans to hold on to the Jordan River Valley as a security border.

Settlements on the eastern side of the barrier, including Schneller's, will likely go.

Schneller made it clear that the so-called Green Line, which served as Israel's frontier until it captured wide swaths of Arab territory in the 1967 Mideast War, will not be the border between Israel and a future Palestinian state.

"The Green Line will be just one of the parameters," he said.

Ghazi Hamad, a spokesman for the Hamas-led government, rejected that idea, saying, "any plan less than full Israeli withdrawal from the 1967 border will not be acceptable to us," he said.

In the meantime, Olmert says he wants to negotiate a peace deal, although he has said he will not hold talks with Abbas as a way of bypassing Hamas. The government official said the Cabinet would have to decide within a year whether it wants to move ahead unilaterally.

Once that is decided, Israel will seek international backing — especially from the United States — for its unilateral withdrawals, the official said.

Israel says it needs to separate from the Palestinians in order to ensure a Jewish majority in the lands it controls. But officials say they won't wait forever for Hamas to change its stripes.

"Our battle has to be a battle to live as good neighbors without a peace agreement," Schneller said.