Palestinian leader Mahmoud Abbas is due to consult Arab leaders on whether to quit the Middle East peace talks after Israel refused to extend its partial West Bank settlement freeze.
Mr Abbas has arrived in the Libyan city of Sirte, where the Arab League will hold two days of meetings.
He is expected to lay out his position in a speech to delegates.
Palestinian reports say he has hinted at "historic decisions" which could even see him resigning his post.
The immediate stumbling block is Jewish settlement building on the West Bank, which is illegal under international law.
Israeli Prime Minister Benjamin Netanyahu has rebuffed pressure from the Palestinians, the US, EU and UN to extend the building restrictions, which expired late last month.
For weeks now, US President Barack Obama has been ratcheting up the pressure to try and keep the month-old Israeli-Palestinian peace talks alive.
In an interview published on Wednesday, the Israeli ambassador to Washington said that the US had offered Israel "incentives" to renew the partial freeze.
Michael Oren told the Washington Post that the Obama administration had come up with "a number of suggestions, incentives if you would, to the Israelis that would enable the government to maybe pass a limited extension of two or three months."
Ambassador Oren gave no details of what those incentives might be, but one day later announced that Israel had signed a $2.75bn (£1.7bn) deal with the US to buy 20 F-35 fighter jets.
"The signing... is an event of great strategic and historic significance," he said in the statement issued on Thursday.
Describing the F-35 as the world's most advanced fighter, Mr Oren said it would boost Israel's ability to defend itself "against any threat or combination of threats, from anywhere within the Middle East."
In other Middle East developments on Thursday, Prime Minister Benjamin Netanyahu came out in favour of a contentious new loyalty oath, in what appeared to be an attempt to placate hard-liners in his coalition who are opposed to concessions on settlements.
Israel has occupied the West Bank since the Middle East war of 1967.
About 500,000 Jews now live in more than 100 settlements which are held to be illegal under international law, although Israel disputes this. About 2.5 million Palestinians live in the West Bank.
The Islamist movement Hamas, which controls the Gaza Strip and is not taking part in the talks, has urged Mr Abbas to withdraw from the peace talks.
Direct talks between Israel and the Palestinians resumed at the White House in September after a break of nearly two years.