Ian Black: Papers give "overwhelming impression" of "weakness" of Palestinian side
Leaked documents released by al-Jazeera TV suggest Palestinian negotiators agreed to Israel keeping large parts of illegally occupied East Jerusalem.
The Israelis apparently rejected the concession and made no offer in return.
Al-Jazeera says it has thousands of confidential records on the peace process covering the years 2000-2010.
The chief Palestinian negotiator questioned the validity of the documents, which the BBC has been unable to verify independently.
Saeb Erekat dismissed the documents as "a bunch of lies" in an interview with al-Jazeera shortly after they were released.
Al-Jazeera says it has 16,076 confidential records of meetings, emails, communications between Palestinian, Israeli and US leaders.
The papers are believed to have leaked from the Palestinian side.
The alleged offers relating to East Jerusalem are the most controversial, as the issue has been a huge stumbling block in Mideast talks and both Israelis and Palestinians claim Jerusalem as their capital.
The BBC's Wyre Davies, in Jerusalem, says that for years, the same Palestinian leaders have been talking with Israeli and American negotiators - but getting nowhere.
He says there has been increasing frustration and protest among many Palestinians over what they see as Israeli expansion and the weakness of their own leaders - a view that will be reinforced by the leak of these documents.
Holy site
Israel has occupied the West Bank, including East Jerusalem, since 1967, settling close to 500,000 Jews in more than 100 settlements.
The 'Palestine Papers' are nothing like as embarrassing as the recent dump of diplomatic cables on the Wikileaks website for the US administration but will cause some angst.
The reportedly curt dismissals by some US politicians of Palestinian pleas do not fit with the message of even-handedness that President Obama tried to put across in his 2009 Cairo speech - though any student of international realpolitik would be unsurprised by the tone.
But more seriously, the leaks - and the concessions reportedly offered by the Palestinian negotiating team - undermine the position of the Fatah-run Palestinian Authority (PA) and will, US officials will probably fear, boost the cause of Hamas - a group the US (and the EU) refuses to deal with and both brand a 'terrorist organisation'.
Any undermining of the PA will, in Washington's eyes, only make a peaceful settlement of the Israeli-Palestinian conflict that much more difficult.
According to al-Jazeera, in May 2008, Ahmed Qureia, the lead Palestinian negotiator at the time, proposed that Israel annex all Jewish settlements in East Jerusalem except Har Homa (Jabal Abu Ghneim), in a bid to reach a final deal.
"This is the first time in history that we make such a proposition," he reportedly said, pointing out that this was a bigger concession than that made at Camp David talks in 2000.
Palestinian Liberation Organisation (PLO) leaders also privately suggested swapping part of the flashpoint East Jerusalem Arab neighbourhood of Sheikh Jarrah for land elsewhere, according to the leaked documents.
In addition, Palestinian negotiators are said to have proposed an international committee to take over Jerusalem's Temple Mount, which houses the Dome of the Rock and Al-Aqsa Mosque - Islam's third holiest site.
And they were reported to be willing to discuss limiting the number of Palestinian refugees returning to 100,000 over 10 years.
These are all highly sensitive issues and have previously been non-negotiable.
Current peace talks between Israel and the Palestinians have been suspended for months, ostensibly over Israel's refusal to stop building Jewish settlements on occupied Palestinian land.
BBC diplomatic correspondent Jonathan Marcus says it appears to be clear from the leaked documents that the Palestinian side was prepared to offer significant concessions, something that the Israeli government has never been willing to acknowledge.
The Palestinian ambassador to the UK, Manuel Hassassian, said that if confirmed, the documents would show that "major concessions" had been offered.
"But I think we need to see this in context," he told the BBC World Service's World Today programme.
"What was Israel willing to give in return to these concessions? Nobody talks about the other side."
