NATO member Turkey was a key regional ally of Israel until the two countries cut ties in 2010 over the deadly storming by Israeli commandos of a Turkish aid ship bound for Gaza, which left 10 Turkish activists dead.
After years of bitter accusations and inflammatory rhetoric, the two sides held secret talks in December to seek a rapprochement, with another round taking place in February in Geneva.
"The teams made progress towards finalising the agreement and closing the gaps, and agreed that the deal will be finalised in the next meeting which will be convened very soon," the Turkish ministry said in a statement after the fresh round of talks yesterday.
Ankara said the latest talks in London brought together powerful Turkish foreign ministry official Feridun Sinirlioglu, Joseph Ciechanover, an advisor to Israeli Prime Minister Benjamin Netanyahu, and Israeli National Security Advisor Jacob Nagel.
In an interview with Turkish newspaper Vatan today, Prime Minister Ahmet Davutoglu said "significant progress has been made", adding that the two sides were hoping to reach "a final stage" in the talks soon.
Turkey had already said in February that the former allies were "close to concluding a deal".
Israel apologised to Turkey in 2013, in what many thought would trigger a warming in ties, but tensions soared again the following year when Israel launched a massive military offensive in Gaza.
Turkey's other condition is that victims of the Mavi Marmara be compensated, and has said that talks have advanced in this regard.
The Mavi Marmara was one of six ships which headed to Gaza in May 2010 carrying humanitarian supplies in a bid to break the blockade of the Strip which has been in place since 2007, shortly after the Islamist militant group Hamas won elections there.
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