Under the plan, Israel will remove about 50 roadblocks, upgrade checkpoints to speed up the movement of Palestinians through the West Bank and give Palestinians more security responsibility in the town of Jenin with an eye toward looking at "other areas in turn."
The Israelis also pledged to boost the number of travel and work permits it gives to Palestinians and support economic projects in Palestinian towns.
In return, the Palestinians vowed to improve policing of Jenin "to provide law and order, and work to prevent terror," according to a State Department statement released shortly before Rice spoke.
Israeli Defense Minister Ehud Barak and Palestinian Prime Minister Salaam Fayyad, who signed off on the package at a three-way meeting with Rice earlier Sunday, agreed to pursue the measures with "special, immediate emphasis and work," the statement said.
"We've been told that this is going to start and, hopefully even be completed in a relatively short period of time," Rice told reporters. "I am expecting it to happen very, very soon."
"We will be monitoring and verifying," she added.
Immediately after the announcement, Barak's office issued a statement that said the Defense Ministry had approved the Israeli part of the package last week.
It includes removal of 50 travel barriers in and around Jenin, Tulkarem, Qalqiliya and Ramallah, the dismantling of one permanent roadblock, the deployment of 700 Jordanian-trained Palestinian police in Jenin and allowing them to take delivery of armored vehicles.
It also raises the number of Palestinian businessmen allowed into Israel to 1,500 from 1,000 and boosts the number of work permits for Palestinian laborers by 5,000 from its current number of 18,500.
Neither Barak nor Fayyad, who both appeared at a brief photo opportunity with Rice after their meeting but said nothing, had any immediate comment on the developments.
One Palestinian official said he welcomed any improvement, but said the Israeli moves were "too little, too late." "We want Israel to move quickly in removing these obstacles that make no sense and make the lives of the Palestinians difficult," Planning Minister Samir Abdullah said.
Israel maintains hundreds of checkpoints, roadblocks and other travel restrictions in the West Bank, measures it says are needed to stop suicide bombers. The Palestinians say the restrictions are excessive and have stifled their economy. They have made removal of the checkpoints a top priority as the two sides, with U.S. backing, try to negotiate a final peace agreement by the end of the year.
Rice had said she was looking for "meaningful" steps from both sides to implement the long-stalled roadmap, the U.S.-backed peace plan that envisions the creation of an independent Palestinian state through concessions on both sides.
"There has not been enough momentum," she said. "This is a start in terms of delivering on some of those obligations."
Among the other measures in the package announced Sunday are plans to build new housing for Palestinians in 25 villages, connect Palestinian villages to the Israeli power grid and Israeli support for large-scale economic development programs and encouragement of foreign investment.