The European Union is developing a proposal to restart peace talks between Israel and Palestine that it will put forward in March, Israeli media reported on Sunday.

The plan will set out the principles of a future peace accord, and a timetable for negotiating all the key issues during 2013, Israeli diplomatic sources told newspaper Yedioth Ahronoth.

It has been championed by British and French foreign ministers, is supported by Germany, and EU foreign policy chief Catherine Ashton is trying to get the rest of the union on board.

According to the report, the plan poses a regional Middle Eastern committee to oversee the process, and Palestinian officials have already said they will join the body.

"The Europeans can't force Israel to enter into an agreement, but they can certainly put us in an awkward position," a senior Israeli official told the newspaper.

"They are drafting a document which will present the principles of the future peace accord, putting it on the table as a challenge," the official said.

"It is likely the Palestinians will accept it and that Israel will have some difficulty. It will drive us into the corner."