Annexation talks: 'No Palestinian state, no halt on settlements'
Netanyahu's remarks were made in a meeting with 11 settlement leaders who did not object to US President Donald Trump's widely condemned 'Deal of the Century' plan, unveiled early this year, according to Haaretz.
The plan also envisions the creation of a 'Palestinian state' - divided into several small enclaves - with severe limitations on its sovereignty and Israeli security control.
The premier said that although the US-proposed plan includes forming an independent Palestinian state, he "does not call [the entity] a state".
Netanyahu said Israel was still waiting for a green light to annex parts of the West Bank, but would possibly annex less territory than planned, Haarertz reported, citing a confidential source who attended the meeting.
The Israeli leader made similar remarks in a meeting with settler leaders last week, where he secretly assured them of plans to annex the occupied West Bank without conditions set in the US peace plan.
The plan, which was fiercly rejected by Palestinians, originally gave Israel the green light to annex vast areas of the West Bank, including Israeli settlements and the Jordan Valley.
More progress on the annexation is expected just "within a few weeks", Knesset speaker Yariv Levin, who also attended the meeting, was quoted as saying.
Read also: Prominent British Jewish figures condemn Israel's West Bank annexation plans
Thousands of Israelis rallied in Tel Aviv on Saturday night against the government's plans to annex parts of the occupied West Bank.
Thousands demonstrated against the plan in Tel Aviv, waving Israeli and Palestinians flags. Protestors also expressed sentiments against the occupation of the West Bank.
Israel began mapping the areas it seeks to seize control of in February.
Last month, US Ambassador David Friedman to Israel said that Washington would be "ready to recognise" the annexation of the Palestinian lands once the Israeli government had "declared sovereignty" over them.