Israel's president Shimon Peres is pressing the government to hand over control of six key Christian sites to the Vatican, Haaretz newspaper reported on Monday.
But the Vatican's longstanding demand that Israel transfer sovereignty of the sites has created dissent among senior officials in Jerusalem, Haaretz said, quoting Army Radio.
The sites include the Church of the Annunciation in Nazareth; the Coenaculum on Mount Zion in Jerusalem, where Jesus is said to have held The Last Supper; Gethsemane, which sits at the foot of the Mount of Olives in Jerusalem; Mount Tabor; and the Church of the Multiplication, on the Sea of Galilee.
Peres is lobbying Israel's interior minister, Eli Yishai, to cede control of the sites to the Catholic church, Army Radio reported.
The dispute between Jerusalem and the Holy See threatens to overshadow Pope Benedict XVI's historic visit to Israel and the Palestinian territories next week.
Vatican officials have made it clear that they intend to reiterate their demand during the visit that Israel hand over control of the Coenaculum, the dining room of the house where Jesus ate the last supper, Army Radio reported.
Israel's foreign ministry on Sunday launched a website dedicated to the pope's visit.
The site - www.popeinisrael.org.il - is available in eight languages - English, French, Spanish, Portuguese, Polish, Italian, German and Hebrew.
The website also contains textual and audio-visual information about the pope's visit, relations between Israel and the Vatican, and Christian communities and holy sites in Israel.
During the pope's visit to Israel and the Palestinian territories, he will hold meetings with Israeli and Palestinian leaders. He will also celebrate mass in Jerusalem, the Israeli city of Nazareth and the Palestinian city of Bethlehem amid tight security.
Nazareth is the place which Christians believe Jesus lived and preached, while Bethlehem is said to be the place of Jesus' birth.
The pontiff will also visit Israel's Holocaust museum or Yad Vashem memorial and will then hold a meeting with inter-faith dialogue organisations.
Benedict will become the first pope to visit the Dome of the Rock, one of Islam's holiest sites, located in Jerusalem's old city, where he will meet the Grand Mufti.
Benedict will also visit the Western Wall, Judaism's holiest site and meet with the two chief rabbis of Israel at the Hechal Shlomo Centre.
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