Israel says it is ready to cede parts of Jerusalem to the Palestinians in the framework of a peace deal, ahead of the start of talks in Washington.
Defence Minister Ehud Barak said partition in Jerusalem - at the heart of the Palestinian-Israeli conflict - would include a special regime for managing the city's holiest sites.
Mr Barak said the killing of four Israelis by Palestinian gunmen in the West Bank on Tuesday should not stop the talks from going ahead, Reuters reports.
Israeli Prime Minister Benjamin Netanyahu meets Palestinian President Mahmoud Abbas at the White House on Thursday for their first face-to-face negotiations.
Israel captured the eastern part of the city from Jordan in a 1967 war and annexed it in a move not recognised internationally.
Palestinians want East Jerusalem as the capital of a state they hope to set up in the West Bank and Gaza Strip.