Israel and Turkey began talks Monday on compensation for the families of victims of a deadly 2010 flotilla raid, for which the Jewish state apologised last week, ending a near three-year diplomatic rift.

"Officials delegated by the two sides will work on the compensation issue. We gave the kickstart for it today," Deputy Prime Minister Bulent Arinc told reporters after a weekly cabinet meeting.

Ties between Israel and Turkey plummeted in May 2010 when Israeli commandos staged a botched pre-dawn raid on a six-ship flotilla to the Gaza Strip, killing nine Turkish nationals.

The assault triggered an international outcry and a bitter diplomatic crisis between Turkey and Israel, with Ankara demanding a formal apology and compensation for the families of the victims.

Until last week, Israel had refused. But on Friday, Israeli Prime Minister Benjamin Netanyahu apologised to Turkey for the raid -- a breakthrough brokered by US President Barack Obama during his visit to the Jewish state.

"This is a big success of Turkish foreign policy," Arinc said.

He said that Turkey's foreign minister "held talks with the other party and expressed the necessity to swiftly solve the issue."

In remarks over the weekend, Turkish Prime Minister Recep Tayyip Erdogan said the country's future diplomatic relationship with Israel -- including the appointment of a new ambassador to Israel -- would depend on the Jewish state.