Israel's Defense Minister Ehud Barak said on Tuesday that the planned meeting on that day between Israeli Prime Minister Benjamin Netanyahu and Palestinian National Authority (PNA) Prime Minister Salam Fayyad may not take place.

In an interview with Army radio, Barak cited disagreements over a transfer by Israel of tax revenues collected on behalf of the PNA as the reason for calling off the parley.

If the two sides do meet, it will be at an undisclosed time and location in Jerusalem, for the highest-level session in nearly 20 months, at which they are expected to exchange letters laying out terms for returning to long-stalled peace talks.

Fayyad is expected to hand Netanyahu a letter from PNA President Mahmoud Abbas calling for negotiations, pending a halt in all settlement construction, including east Jerusalem; accepting the pre-1967 war armistice lines as the basis of a future final-status agreement with minor emendations; and a release of Palestinian prisoners jailed since the end of 1994.

In parallel to the last demand, some 1,600 Palestinian prisoners are planning to start a hunger strike, according to the Ynet news site.

Netanyahu has long opposed such terms for returning to talks, averring that they prejudge the talks' outcome, particularly the demand to retreat to the pre-1967 lines.

In January, the sides made no progress in a series of low-level talks held in Jordan, after which the Palestinians began threatening to abrogate all connections with Israel and again turn to the United Nations to announce statehood, a move quashed by the United States and other Western countries last September.

U.S. ambassador to Israel Daniel Shapiro said Monday that they would again use their veto power if the PNA turned to the world body, and called for direct negotiations between the two sides without preconditions, as outlined by U.S. President Barack Obama in a May 2011 speech.

However, "As a result of actions taken by successive Israeli governments," Abbas wrote, in a copy of the letter's contents leaked last week, "the Palestinian National Authority no longer has any authority, and no meaningful jurisdiction in the political, economic, social, territorial and security spheres."

Both Israeli and Palestinians sources dismissed the significance of the meeting itself, but rather what talks take place afterward, according to Israel Radio. Netanyahu, in recent days, has called on Abbas to meet directly with him, a demand sources close to the prime minister say he'll likely raise, if the meeting actually takes place.