Negotiators are close to striking a long-awaited deal on compensation for Turkish victims of a deadly Israeli raid on a Gaza aid flotilla four years ago, a Turkish official said Monday.

The May 2010 Israeli assault on the Turkish ship the Mavi Marmara while it was in international waters sent relations between Israel and Turkey to an all-time low.

Talks on compensation for the nine Turks killed in the raid eventually began in March 2013 after Israel extended a formal apology to Turkey in a a breakthrough brokered by US President Barack Obama.

"We are close to an agreement" to settle the compensation issue, a Turkish official told AFP on Monday.

Turkish foreign ministry undersecretary Feridun Sinirlioglu was in Israel earlier this month to discuss the terms of a agreement, which will help normalise relations between the Jewish state and its once closest Muslim ally.

Foreign Minister Ahmet Davutoglu acknowledged on Sunday there had been a "momentum" in talks in order to bridge the gaps.

"It would not be correct to provide a timeframe on such (delicate) issues but I can say that serious progress has been made in recent meetings," Davutoglu told Turkish television.

"A historic step was taken with the apology... Now a second step will be taken with the compensation."