Tel Aviv - The European Union will freeze a planned upgrade of relations with Israel, an Israeli newspaper reported Thursday, quoting an internal Israeli Foreign Ministry paper.

Ha'aretz also cited a Swedish diplomat, who spoke ahead of Stockholm's assumption of the bloc's rotating presidency in July.

The freeze follows Israel's December-January offensive in Gaza, as well as the refusal by the new Israeli government of hardline Prime Minister Benjamin Netanyahu to openly and directly support the creation of a Palestinian state, the daily said.

It quoted the internal Foreign Ministry document as saying that four EU member states have already announced they will not agree to upgrading ties with Israel, unless its accepts a two-state solution to its conflict with the Palestinians. Unanimous agreement is needed to continue the upgrade, it noted.

The deputy director-general of Sweden's Foreign Ministry, Robert Rydberg, also told new Israeli Deputy Foreign Minister Danny Ayalon that the upgrade of Israel's relations with the EU would be frozen, Ha'aretz said.

The Netanyahu government took office in late March, following February 10 elections in which right-wing parties won a majority of parliament seats and sent the former ruling centrist Kadima party into opposition. (dpa)