The proposal includes a timeline for the establishment of an independent Palestinian state, conditional on progress on key issues like settlements and security guarantees for Israel.
Saudi Arabia is increasingly keen to shore up its security and ward off threats from rival Iran, sources say.
Under proposed deal, in exchange for the return of the captives, Israel would halt its military operation and release a yet-to-be-determined number of terrorists. The rounds of the deal are expected to take place over approximately two months, allowing Hamas to claim that Israel has ended the war as demanded.
Among the suggestions of Biden's fellow Democrats is that any agreement include "meaningful" provisions to preserve the option of a two-state solution to the Israeli-Palestinian conflict.
One source noted that on the big issues there are no insurmountable gaps because the disagreements are not substantial, adding that American emphasis on the Palestinian aspect has been perceived as over the top.
“All sides have hammered out, I think, a basic framework for what we might be able to drive at,” White House official John Kirby says, amid ongoing efforts to bring the Sunni kingdom into the Abraham Accords.
"The normalization will be between Israel and Saudi Arabia. If the Palestinians oppose it the kingdom will continue in its path," one source says. "Saudi Arabia supports a peace plan for the Palestinians, but this time it wanted something for Saudi Arabia, not just for the Palestinians."
Haim Katz is expected to take part in various events and forums during his two-day visit. He will also hold meetings with his various counterparts, with a focus on those from the region.
Israeli officials say that although there has been progress in the negotiations over a potential normalization agreement, difficulties still remain.
Prime Minister Benjamin Netanyahu has reportedly instructed Israeli nuclear experts to work on such a proposal as part of a potential normalization agreement with Riyadh.