Israel has been linking the opening of Gaza's borders to the release of captive Israel Defense Forces soldier Gilad Shalit, who has been held by Hamas militants for over three years. Hamas has been pushing for a deal to trade him for hundreds of Palestinian prisoners currently held in Israeli jails.
Israel imposed a near-total embargo of the Gaza Strip in 2007 after Hamas militants violently took control of the territory.
According to the new plan, reported by the news Website Ynet, Israel would increase supplies of coffee, tea, soups, meat, fish and canned goods into Gaza ahead of the holy Muslim month of Ramadan, which begins in August, to promote a deal for Shalit.
Israel would also renew shipments of fuel, clothing, kitchenware and egg-laying chickens as part of the package.
Ynet reported that the proposal had been drafted by defense officials and awaits the approval of Defense Minister Ehud Barak.
The Defense Ministry would not officially comment on the report.
The idea behind the plan, according to Ynet, was to lift the embargo gradually and link it to progress on Egyptian-mediated talks aimed at releasing Shalit from captivity. The plan does not include transferring products such as steel and concrete, which are needed to rebuild the battered territory but could also help Hamas improve its military capabilities.
Hamas and other militants have fired thousands of missiles at Israeli border towns and communities in recent years.
Israel has come under heavy pressure from the international community - including the Obama administration - to lift its embargo, which has crippled the Gaza economy. Gaza has survived largely thanks to a booming underground smuggling trade between Gaza and Egypt.
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