A legislation to divide Jerusalem was blocked by Israel Prime Minister Benjamin Netanyahu on 2 July.
The Jerusalem Post quoting the Prime Minister's Office said that Netanyahu wanted the coalition to reach a consensus on what the bill would look like rather than forwarded by Education Minister Naftali Bennett's Bayit Yehudi Party.
The bill requires 80 members of the Knesset (Israel's parliament) votes to approve the concession of any part of Jerusalem.
Head of Bayit Yehudi party Naftali Bennett, said that the bill sets a very high bar for dividing Jerusalem.
"Twice in the last 15 years, we were a hair's breadth away from giving away the Temple Mount, Mount of Olives, City of David and three-quarters of the Old City to the Palestinians in the time of [former prime ministers Ehud] Barak and [Ehud] Olmert," he noted.
"Netanyahu blocked the legislative process but we are determined to pass it in three readings and I'm sure we can unite around the bill and Jerusalem," he added.
During the 1967 Middle East War, the West Bank, including East Jerusalem, was occupied by Israel. It was later annexed in 1980, and was declared the capital of the Jewish state.
However, West Bank and East Jerusalem are viewed as "occupied territories" by the international law and all Jewish settlement-building activities on the land are considered as illegal.
The Palestinians have accused Israel of waging an aggressive campaign by calming the historic and sacred city with the aim of destroying its Islamic identity and driving out Palestinian inhabitants.