In 1936, in response to the Arab Revolt against the British mandatory government and repeated Arab violence against Jews, the British government appointed a commission of inquiry headed by Lord Peel to assess the cause of the Arab riots and the performance of the Mandate government. In July 1937, the Peel Commission recommended for the first time a partition of the land into a Jewish state and an Arab state alongside an international zone, stretching from Jerusalem to Jaffa, that would remain under British mandatory authority. The Commission also recommended an exchange of land and population between the two states.
The Peel partition plan was rejected by the Arabs and was widely debated amongst the Jewish leadership. In 1938, the British declared the plan unimplementable.
Sources: Middle East Maps [link broken].
Israel Ministry of Foreign Affairs.