The Telegraph, Independent and its sister publication i report on claims in the Israeli media that a secret deal was struck between Israel’s Prime Minister Benjamin Netanyahu and his Jewish Home coalition partner, that permission would be given to build 1,000 homes in major West Bank settlement blocs over the coming months, in exchange for coalition unity following Sunday’s cabinet decision to release 104 Palestinian prisoners. The reports include Palestinian warnings that such construction would wreck nascent peace negotiations. BBC News Online reports that Justice Minister Tzipi Livni, who heads Israel’s peace efforts, has urged coalition unity as peace talks begin. An analysis in the Financial Times suggests that current peace-making efforts show that the Obama administration is learning from past mistakes.

The online editions of the Guardian, Telegraph and Financial Times cover a televised announcement made yesterday by Egypt’s cabinet which vowed to forcibly remove the two large protest camps of Mohammed Morsi’s supporters in Cairo, which it says “represent a threat to Egyptian national security.” Morsi’s supporters have vowed not to move and maintain their protest. The Times reports that Senator John McCain and his Republican colleague Senator Lindsey Graham are being sent to Cairo by President Obama on a mediation mission to broker a path towards reconciliation between the two sides.

The Telegraph online reports that a United Nations (UN) team of chemical weapons inspectors has been granted permission by Syria’s government to visit three sites of suspected chemical weapons attacks. The team attempt to determine if such weapons were used, but not who used them.

Both the Telegraph and the online edition of the Guardian say that Foreign Secretary William Hague phoned his Iranian counterpart Ali Akbar Salehi yesterday and said that the UK is open to improving bilateral relations with Iran on a “step-by-step and reciprocal basis.” Hague also suggested that the two meet during the UN General Assembly in September. An analysis in the Guardian suggests that a new Iranian Foreign Minister will soon be in place, with Mohammed Javad Zarif the apparent frontrunner for the position. The article claims that Zarif is considered a figure that the United States would be able to deal with. Meanwhile, i says that Russia’s President Vladimir Putin will meet Iran’s new President Hassan Rowhani for the first time in September in Kyrgyzstan.

The Independent’s online edition reports that Eric Burdon, front man for the Animals, will perform in Israel despite threats made against him should he go ahead with the concert.

The Israeli dailies lead this morning with the news that Bank Hapoalim’s chief economist Leo Leiderman has been nominated as the new Governor of the Bank of Israel following Jacob Frenkel’s dramatic withdrawal of his candidacy earlier this week. It is the top story in Yediot Ahronot, Israel Hayom, Haaretz and Makor Rishon. Leiderman’s selection by Prime Minister Netanyahu and Finance Minister Yair Lapid is widely commended, although writing in Yediot Ahronot, Sever Plocker suggests that acting Governor Karnit Flug did not get the top job because Netanyahu would prefer not to see a woman in the role.

Meanwhile, the top story in Maariv, which is also covered prominently in Israel Hayom and Makor Rishon, is the passing of the first reading in the Knesset of the Governability Bill, which proposes raising the electoral threshold from two per cent to four per cent. Although the proposed legislation will be discussed at the committee stage and must pass second and third Knesset votes, the bill produced a stormy debate yesterday as it would make it difficult for smaller parties to get elected successfully.

Makor Rishon reports comments made by Palestinian Authority (PA) President Mahmoud Abbas, who said that Israeli-Palestinian peace negotiations would focus first on borders and security before moving on to the other core issues. However, Maariv suggests that the agreed framework for negotiations will see all core issues discussed simultaneously.