The British government will only back a Palestinian bid for statehood at the UN next week under stringent conditions, a Foreign Office official said today.

Britain would support a Palestinian attempt to secure "observer state" status at the General Assembly on condition that the Palestinians agree to return to peace talks without preconditions and that Israel's concerns over potential future prosecutions at the ICC were met.

The UK considers a direct Palestinian appeal to the UN Security Council "catastrophic", since it would be likely to result in the US and Israel withdrawing funding from the Palestinian Authority.

Britain's preferred scenario is Palestinian acceptance of a package crafted by Quartet envoy Tony Blair and EU foreign affairs representative Catherine Ashton, under which the PA would be upgraded to a new legal status below that of a state, although diplomats close to Palestinian Authority President Mahmoud Abbas indicated that it was unlikely that he would accept that initiative.

The General Assembly non-member "observer state" option would, in practice, give the Palestinians a seat within many UN institutions. The big concern for Israel is that this would be likely to result in the International Criminal Court gaining jurisdiction over the West Bank, enabling the Palestinians to lodge legal cases against Israel over issues like settlement construction.

Britain has so far taken no formal position on the upcoming UN bid but is waiting to see which course of action Mr Abbas will take at the UN next week.

Officials fear that if, by next Tuesday, Mr Abbas has not made a proposal, his course will be set for a showdown at the Security Council next Friday.