ANKARA

Israeli and Turkish officials on Monday began talks on compensation over a deadly Israeli raid on a Gaza-bound aid ship, a crucial step towards restoring the once-solid ties between the two countries.

This first meeting is part of what Turkish officials said would be a several-step diplomatic process that will seek an agreement on the amount to be paid out to "meet the needs of the victims' families."

The Israeli Embassy in Ankara refused to comment on the strictly closed door talks, which has seen Israeli officials visit their formerly strategic ally for the first time in almost three years.

The high-stakes negotiations follow a formal apology last month Israel finally made for the botched 2010 raid in which its troops killed nine Turkish activists on a Gaza-bound flotilla.

The gesture came as Israel's leaders bowed to pressure from US President Barack Obama to make such a concession. A strong ally for both Turkey and Israel, Washington has long been trying to repair relations between the two countries.

Before full ties can be restored and an Israeli ambassador reappointed however, Ankara insists the Jewish state pay compensation for the raid victims and lift its punishing restrictions on Gaza.

Those two issues will be the sticking points in the talks, according to lawyers for the victims' families.

Turkish Deputy Prime Minister Bulent Arinc, heading the delegation at the meeting in Ankara, has warned that an agreement may not be reached if some of the families of the dead reject the deal.

Israel imposed its blockade on Gaza in 2006 after Gaza militants seized an Israeli soldier, who was eventually freed in 2011 in a trade for 1,000 Palestinian prisoners held by Israel.

The blockade was strengthened in 2007, when the Islamist Hamas movement took control of Gaza, then eased somewhat following an international outcry over the killing of the Turkish activists.

Despite the Turkish demands, hopes are high that compensation will not be a stumbling block in normalising ties between the two predominantly non-Arab countries, both of which have the growing chaos of Syria on their doorsteps.

Observers point to the fact that the prime ministers of both countries are directly involved in the process as a cause for optimism.

Despite the compensation negotiations, pro-Palestinian activists in Turkey say they will not withdraw a lawsuit against four top Israeli military chiefs over the fatal 2010 raid. The next hearing in that case is scheduled for May 20.

Some analysts say Ankara may be using that case as leverage against Israel in the compensation negotiations.

Deputy Prime Minister Arinc has said that "if Israel pays the compensation ... then the lawsuits should be withdrawn".

But families insist Arinc spoke "too soon" and on their behalf without their consent "to push them for a quick agreement."

They are likely to meet Prime Minister Recep Tayyip Erdogan in the coming days.

Monday's talks come a day after US Secretary of State John Kerry called on Erdogan to delay a trip to Gaza, which he was planning to visit at the end of next month, after visiting Washington on May 16.

Washington would like "as little outside distraction as possible" as it tries to breathe life back into the Israeli-Palestinian peace process, Kerry said in Istanbul after talks with Erdogan.

Abbas's West Bank-based nationalist Fatah movement, a long-time rival to Hamas, has also said Erdogan's plans to visit Gaza would foster intra-Palestinian divisions.

The Hamas rulers of Gaza responded by accusing both Kerry and Abbas of "collusion in a bid to maintain the (Israeli) blockade on Gaza."