The aides said any freeze would not encompass building the new units and finishing some 2,500 others currently under construction. Netanyahu faces internal opposition since his coalition is dominated by hard-liners opposed any freeze.
The settlement suspension also would not include east Jerusalem, which the Palestinians hope to make their future capital.
The U.S. has a set a high public bar for a freeze, saying repeatedly that all settlement activity on lands the Palestinians claim for a future state must stop, without exception. However, Israel appeared to gain some wiggle room in recent weeks as the sides discussed the details of a would-be settlement freeze.
The two Netanyahu aides spoke to The Associated Press on condition of anonymity because the government has made no official announcement. The information also appeared in major Israeli media Friday morning and was clearly intended for public consumption.
It was unclear if Washington had prior knowledge of the Israeli announcement, which had the potential to undermine the Obama administration's credibility in the Arab world.
Kurt Hoyer, spokesman for the U.S. embassy in Tel Aviv, said Washington would be unlikely to accept anything "contrary to the spirit of negotiations they've been undertaking" and added it was "doubtful" the U.S. had signed off on the Israeli decision.
But the initial response from Washington was muted.