Israel has agreed to compensate a family from southern Gaza whose two sons were shot dead by Israeli troops during the 22-day war over New Year 2009, a rights group said on Monday.

According to a statement from the Gaza-based Palestinian Centre for Human Rights (PCHR), Israel has agreed to pay compensation of 430,000 shekels ($108,315) to the Shurrab family from Khan Yunis over a deadly incident which occurred shortly before the end of the massive Israeli operation.

On January 16, 2009, Mohammed Shurrab was driving through the city with his two sons, Kassab, 28, and Ibrahim, 18, during a truce period when the army opened fire at the car, causing it to crash into a wall, PCHR said.

"Shortly after, Israeli soldiers stationed in a nearby house headed towards the car. They ordered Mohammed Kassab Shurrab and his two sons to get out of the car before they began firing at them. Kassab was killed instantly and Ibrahim was wounded in his leg by a bullet," it said.

The teenager, who was prevented by troops from being evacuated in an ambulance, died later that day from massive bleeding, it said.

"PCHR was able to conclude a settlement of 430,000 NIS with representatives of the Israeli military prosecution, which will be paid to the victims’ family within the coming weeks in return for the closing of their claim," the statement said.

But the family said nothing could compensate for the loss of the two young men.

"We as a family are unsatisfied with this settlement, it wasn't a judge's decision it was a bargain," father Mohammad Shurrab told AFP.

"I have been crying since I heard about this. My kids were killed and they are trading him with the filth of this life, money."

The family first appealed through PCHR to the defence ministry, demanding compensation, then later submitted a criminal complaint to the Israeli military prosecution demanding an investigation.

Neither was answered, prompting PCHR to take the case for compensation to Haifa Magistrate Court where the military prosecution sought a settlement to end the claim, it said.

Israel's devastating Operation Cast Lead offensive began in late December 2008 and ended on January 17 after claiming the lives of some 1,400 Palestinians -- more than half of them civilians -- and 13 Israelis, including three civilians and 10 soldiers.