The aim of the program is to show Palestinians there is a side of Israel in addition to the one portrayed in Palestinian media, a senior officer in the army's Central Command told the Hebrew daily Maariv.
Last year, 5,500 Palestinian children participated in the program and so far this year 22,000 Palestinians have visited Israel, the newspaper said.
"The majority of Palestinian children were born prior to the second intifada or during it and know Israel through the negative images shown on their television," the officer said.
"The Palestinian children are accompanied by adults and visit Israel in tour buses without any security presence," the officer added.
Lt. Col. Ofer Meital, head of the Coordination and Liaison Office in areas surrounding Jerusalem, told the newspaper the majority of children have never seen the sea.
"The aim of the project is to show children there is another way of life on the other side of the security barrier," he said.
Among the most popular sites is the beach at Bat Yam, where the surrounding rock formation provides a pool of shallow water allowing children who don't know how to swim to enter the water.
Other venues that have proven popular are the amusement park in Tel Aviv, the Safari Park in Ramat Gan and the cities of Jaffa and Acre, the report says. The snow-covered Mount Hermon in the north is a popular venue to visit in the winter months, the report said.