The daily Haartez cited EU internal documents which said that the bloc aims to clarify to the Israeli government headed by Prime Minister Benjamin Netanyahu that it would not tolerate certain Israeli decisions that jeopardise the two-state solution.
"The EU considers the preservation of the two-state solution a priority," says the document which summarises the European position following the Israeli decision to take over 400 hectares of Palestinian land south of Jerusalem.
The EU decided to convey a clear message to Israel regarding its position and the decisions that it considered "a growing threat to the two-state solution", the document said.
"The only way to resolve the conflict is through an agreement that ends the occupation which began in 1967, that ends all claims and fulfills the aspirations of both parties. A one-state reality would not be compatible with these aspirations," the document added.
The EU's Ambassador to Israel, Lars Faaborg-Andersen, will clarify the stance to the Israeli government in the coming days when he meets Nissim Ben Shitrit, the director general of the Israeli foreign ministry, and Yosi Cohen, the national security advisor.
According to the newspaper, Faaborg-Andersen will offer a proposal to Israel to start negotiations to ensure the two-state solution as the only possible way to end the Middle East conflict.
Israeli foreign ministry officials are concerned that the negotiations are a prelude to further European sanctions against Israel at a time when the Palestinians are preparing a resolution to present to the UN Security Council.
The Palestinian proposal calls for the end of the occupation within three years which puts Israel in a difficult position as the usual veto on such issues by its main ally, the US, is not guaranteed, the paper said.