Turkey and Israel are close to reaching a deal for compensation on the killing, in 2010, of Turks on-board of Mavi Marmara by Israeli commandoes, when the ship was on its way to break the Israeli siege on the Gaza Strip, Turkish media said.
Senior Israeli officials involved in the talks told the Israeli newspaper Haaretz: "Israel and Turkey are close to signing a reconciliation agreement, and it is possible that ties between the two nations will improve in the next few days."
Turkey's Hürriyet Daily News reported officials from both sides saying they are finalising "minor issues before being submitted to the two countries' leadership".
Haaretz reported Western diplomats attended the talks and that Israel agreed to increase the compensation, to be paid to the families of the Turkish victims, from $15 million (£9.2 million) to $20 million (£12.3 million). They said the Turkish government had demanded the compensation be $30 million (£18.4 million).
This development, Haaretz said, comes in the wake of months of stalemate. It claimed that in December the Turkey asked Israel to resume negotiations over the issue.
When the Israeli team updated Israeli Prime Minister Benjamin Netanyahu about the latest Turkish demands, he agreed to increase the amount to $20 million (£12.3 million) and gave them the ability to increase the pay out within a $2-3 million (£1.2-1.8 million) margin.
Once a deal is signed, the money will be transferred to a special fund that will decide how to distribute the funds to the families by following a number of criteria.
Turkish-Israeli relations, which were very strong and strategic, were shaken in wake of the Israeli attack on the Mavi Marmara killing nine Turks.
Israel apologised to Turkey on March 22, 2013, but the normalisation of relations could not be completed because of differences in the amount of compensation and legal definitions.