This specific offer was unanimously affirmed by the Arab League and immediately endorsed by the Palestinian leadership in March 2002. However, more or less the same plan has been offered by the Arab League and enthusiastically endorsed by the Palestinian leadership going back much, much longer:
link:
http://www.mideastweb.org/saudipeace.htm "The Arab Peace Initiative
(translation by Reuters).
The Council of Arab States at the Summit Level at its 14th Ordinary Session, reaffirming the resolution taken in June 1996 at the Cairo Extra-Ordinary Arab Summit that a just and comprehensive peace in the Middle East is the strategic option of the Arab countries, to be achieved in accordance with international legality, and which would require a comparable commitment on the part of the Israeli government.
Having listened to the statement made by his royal highness Prince Abdullah bin Abdul Aziz, crown prince of the Kingdom of Saudi Arabia, in which his highness presented his initiative calling for full Israeli withdrawal from all the Arab territories occupied since June 1967, in implementation of Security Council Resolutions 242 and 338, reaffirmed by the Madrid Conference of 1991 and the land-for-peace principle, and Israel's acceptance of an independent Palestinian state with East Jerusalem as its capital, in return for the establishment of normal relations in the context of a comprehensive peace with Israel.
Emanating from the conviction of the Arab countries that a military solution to the conflict will not achieve peace or provide security for the parties, the council:
1. Requests Israel to reconsider its policies and declare that a just peace is its strategic option as well.
2. Further calls upon Israel to affirm:
I- Full Israeli withdrawal from all the territories occupied since 1967, including the Syrian Golan Heights, to the June 4, 1967 lines as well as the remaining occupied Lebanese territories in the south of Lebanon.
II- Achievement of a just solution to the Palestinian refugee problem to be agreed upon in accordance with UN General Assembly Resolution 194.
III- The acceptance of the establishment of a sovereign independent Palestinian state on the Palestinian territories occupied since June 4, 1967 in the West Bank and Gaza Strip, with East Jerusalem as its capital.
3. Consequently, the Arab countries affirm the following:
I- Consider the Arab-Israeli conflict ended, and enter into a peace agreement with Israel, and provide security for all the states of the region
II- Establish normal relations with Israel in the context of this comprehensive peace.
4. Assures the rejection of all forms of Palestinian patriation which conflict with the special circumstances of the Arab host countries
5. Calls upon the government of Israel and all Israelis to accept this initiative in order to safeguard the prospects for peace and stop the further shedding of blood, enabling the Arab countries and Israel to live in peace and good neighborliness and provide future generations with security, stability and prosperity
6. Invites the international community and all countries and organizations to support this initiative.
7. Requests the chairman of the summit to form a special committee composed of some of its concerned member states and the secretary general of the League of Arab States to pursue the necessary contacts to gain support for this initiative at all levels, particularly from the United Nations, the Security Council, the United States of America, the Russian Federation, the Muslim states and the European Union."
___________
And this is the offer Israel made at Camp David in 2000:
link:
http://www.fair.org/index.php?page=1113 "The annexations and security arrangements would divide the West Bank into three disconnected cantons. In exchange for taking fertile West Bank lands that happen to contain most of the region’s scarce water aquifers, Israel offered to give up a piece of its own territory in the Negev Desert--about one-tenth the size of the land it would annex--including a former toxic waste dump.
Because of the geographic placement of Israel’s proposed West Bank annexations, Palestinians living in their new “independent state” would be forced to cross Israeli territory every time they traveled or shipped goods from one section of the West Bank to another, and Israel could close those routes at will. Israel would also retain a network of so-called “bypass roads” that would crisscross the Palestinian state while remaining sovereign Israeli territory, further dividing the West Bank.
Israel was also to have kept "security control" for an indefinite period of time over the Jordan Valley, the strip of territory that forms the border between the West Bank and neighboring Jordan. Palestine would not have free access to its own international borders with Jordan and Egypt--putting Palestinian trade, and therefore its economy, at the mercy of the Israeli military.
Had Arafat agreed to these arrangements, the Palestinians would have permanently locked in place many of the worst aspects of the very occupation they were trying to bring to an end. For at Camp David, Israel also demanded that Arafat sign an "end-of-conflict" agreement stating that the decades-old war between Israel and the Palestinians was over and waiving all further claims against Israel"
snip:"In April 2002, the countries of the Arab League--from moderate Jordan to hardline Iraq--unanimously agreed on a Saudi peace plan centering around full peace, recognition and normalization of relations with Israel in exchange for a complete Israeli withdrawal to the 1967 borders as well as a "just resolution" to the refugee issue. Palestinian negotiator Nabil Sha'ath declared himself "delighted" with the plan. "The proposal constitutes the best terms of reference for our political struggle," he told the Jordan Times (3/28/02)."
read full article:
The Myth of the Generous Offer
Distorting the Camp David negotiations
By Seth Ackerman
http://www.fair.org/index.php?page=1113 
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