Israel is seeking the addition of a clause in the PLO's UN bid rejecting membership of the International Criminal Court, the Israeli daily Haaretz reported Tuesday.
The UN General Assembly is expected to vote on Thursday on a resolution upgrading the PLO's status at the world body to a non-member state.
Israel and the US oppose the move, and Israel had asked the US and EU countries not to enter talks with the PLO on the bid, Haaretz reported.
Following warnings from senior US officials that President Mahmoud Abbas would not back down from the bid, Israel is negotiating with Washington to alter the wording of the resolution, the report said.
Haaretz reports that Israel wants the PLO to include a clause stating it will not request membership of the International Criminal Court, where it could charge Israeli leaders with war crimes.
Israel is also seeking a clause stating that the decision grants the PLO no sovereignty over occupied Palestinian land and a commitment to renew negotiations without preconditions.
Britain has indicated that it will support Abbas' UN bid but wants assurances that the resolution will not be used to join the ICC or other UN bodies, the Financial Times reported Monday.
Britain is also hoping Abbas does not use the resolution as a basis for seeking full membership of the UN Security Council, the FT added.
A senior Western diplomat said Monday that the Palestinian Authority has circulated a revised draft of the proposed UN resolution.
The diplomat said only minor changes were made to the text distributed on Monday, which seems certain to win UN approval as the General Assembly is mostly made up of post-colonial states historically sympathetic to the Palestinians.
If approved, the UN resolution would "accord to Palestine Non-member Observer State status in the United Nations, without prejudice to the acquired rights, privileges and role of the Palestine Liberation Organization in the United Nations as the representative of the Palestinian people."
The latest draft resolution, obtained by Reuters, also reiterated the Palestinian Authority's commitment to the "two-state solution" in which Israel and an independent Palestinian state would co-exist in peace.
Israeli leaders have proposed several responses to a successful UN bid, including toppling Abbas and refusing to transfer Palestinian tax revenue which Israel collects on behalf of the Palestinian Authority.
A senior Israeli official told Haaretz that Israel plans to withhold Palestinian revenue immediately after a vote.
The move is likely to be temporary as it could leave the PA unable to pay its security services, which coordinate with Israeli forces in the West Bank.
The United States has also suggested that funding for the Palestinians -- and possibly some funding for the United Nations -- could be at risk if the PLO seeks the upgrade.
"We think the money should go forward in the interest of the Palestinian people, regardless of whether their leaders make bad decisions," US State Department spokeswoman Victoria Nuland said on Monday.
"That said .. we have said to the Palestinians, that they should not count on a favorable response from the (US) Congress, if they go forward with this."
A 1990s US law prohibits American funding to UN organizations that grant full membership to any group that does not have "internationally recognized attributes" of statehood. The PLO is not seeking UN membership.
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