Prime Minister Benjamin Netanyahu is weighing a limited initial annexation in the occupied West Bank, hoping to quell international opposition to his pledge of wide territorial moves, an Israeli newspaper said on Wednesday.

Netanyahu has said a U.S. peace plan, which envisages Israel retaining its settlements in the West Bank, provides a "historic opportunity" to extend Israeli sovereignty to them and to the Jordan Valley.

Israel captured the West Bank, along with East Jerusalem and the Gaza Strip, in a 1967 war. Palestinians hope to establish a state in those areas and say the peace blueprint announced by President Donald Trump in January kills that prospect.

Israel Hayom, a pro-Netanyahu daily widely seen as reflecting his views, said the right-wing leader was now looking at the possibility of annexation in two phases.

It said Netanyahu, who has set July 1 for the start of a cabinet debate on the issue, was considering annexing only small settlements in phase one and then applying sovereignty over the remaining ones after renewing calls to Palestinians for peace talks.

The prime minister has not yet offered a final map that shows how exactly the annexation would look like. An agreement between Netanyahu's Likud and the Blue and White, the second biggest party in the coalition government, on how to move forward with the plan has not yet been reached.

On Wednesday, Israel's media network Kan Radio reported that members of the Knesset (Israeli parliament) from the Blue and White party were attempting to push for a staged annexation plan.

Whether the Blue and White played a part in pushing Netanyahu to entertain with this new idea remains unknown.

Netanyahu's annexation pledges have raised stiff opposition from the Palestinians, Arab countries, and European nations, and Israeli officials say Washington was not on broad but rather attempting to curb the move.

Wasel Abu Youssef, a member of the Executive Committee of the Palestine Liberation Organization, said potential phasing of annexation made no difference. "Netanyahu is trying to confuse the international position which rejects annexation, and the world will not be fooled by such a proposition," he said.

The newspaper said Netanyahu does not anticipate a strong punitive response from Europe for annexation, despite vocal opposition, nor does he see it as substantially damaging Israel's ties with the Arab world.

France has reportedly urged its European Union partners to consider threatening Israel with a tough response. Germany, Jordan, and the Palestinian Authority have declared their priority to prevent the move. Other Arab countries, especially the Gulf states, have repeatedly said annexation would upend all the peace efforts between them and Israel.

Nonetheless, by limiting annexation initially, he hopes to signal that Israel is attentive to international criticism, Israel Hayom said.

It attributed its report to sources that have held discussions with Netanyahu in the last few days but did not identify them. Netanyahu's office declined to comment.

Most countries view Israeli settlements in occupied territory as illegal. Israel rejects this.

(With input from agencies)