Netanyahu's centre-right coalition government had set July 1 as the date from which it could begin implementing US President Donald Trump's Middle East peace proposal.
While no major announcement was expected on Israel's self-imposed kick-off date, Netanyahu's office said talks with US officials "on the application of sovereignty" were ongoing.
Netanyahu was also discussing annexation with his security chiefs, it added, saying "further discussions will be held in the coming days".
In Gaza City, several thousand protesters gathered, some brandishing Palestinian flags and placards condemning Trump.
"The resistance must be revived," Gaza protester Rafeeq Inaiah told AFP. "Israel is afraid of force."
Smaller demonstrations were held in the West Bank cities of Ramallah and Jericho, attended by a handful of left-wing Israeli politicians opposed to annexation.
"We want to affirm our support for peace," former Labour party official Ophir Pines-Paz told AFP.
Read also: Netanyahu ally confirms delays in West Bank annexation plan
The Trump plan, unveiled in January, offered a path for Israel to annex territory and Jewish West Bank settlements, considered illegal under international law.
Netanyahu supports the Trump plan, which has been roundly rejected by the Palestinians. But the veteran right-wing premier has not laid out how he intends to implement the US proposals.
Hamas, the Islamist group that controls Gaza, fired some 20 rockets from the coastal Palestinian enclave into the Mediterranean Sea on Wednesday, a demonstration of force aimed at dissuading Israel from moving forward, Hamas sources told AFP.
The militant movement, which has fought three wars with Israel since 2008, was scheduled to hold a joint press conference on Thursday in Ramallah alongside the West Bank's ruling party Fatah.
Growing global opposition
Writing in Israel's Yedioth Ahronoth newspaper on Wednesday, Britain's Prime Minister Boris Johnson said that although he was a "passionate defender of Israel," he viewed annexation as "contrary to Israel's own long-term interests."
"Annexation would represent a violation of international law," he said.
Australia, in a rare criticism of Israel, warned against "unilateral annexation or change in status of territory on the West Bank".
France, Germany, several other European states and the United Nations all oppose annexation, as do the Gulf Arab states, with which Israel has increasingly sought warmer ties.
Germany's parliament, however, passed a motion Wednesday warning against "unilateral sanctions or threats of sanctions" on Israel over annexation.
Such moves would "have no constructive effect" on the Israeli-Palestinian peace process, it said.
The EU cannot threaten sanctions against Israel without unanimous support among members.
Jordan, one of only two Arab nations that has diplomatic ties with Israel, has repeatedly warned against the move, saying annexation could trigger a "massive conflict".
Domestic opposition
Israel's defence minister and alternate prime minister Benny Gantz has said annexation must wait until the coronavirus crisis has been contained, amid a sharp spike in new Israeli and Palestinian cases.
Israel annexed east Jerusalem following the 1967 Six Day War and then the Golan Heights on the Syrian border in 1981, in moves never recognised by most of the international community.
While some settlers have urged Netanyahu to take similar action in the West Bank, some hardliners oppose the Trump plan as it envisions the creation of a Palestinian state across roughly 70 percent of the West Bank.
"Trump's plan is to establish a Palestinian state in the land of Israel while leaving the Jews with little crumbs," Daniela Weiss, a settler movement leader, told AFP.
"This thing will not happen. We will not eat this bait. We will not fall into this trap."
Despite the mounting headwinds, experts have stressed that Netanyahu may still move forward in the coming days, noting that he is keenly watching the US presidential election and may be eager to act if he fears Trump will not win a second term.
Presumptive US Democratic Party nominee Joe Biden is opposed to any unilateral annexations by Israel.
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