NATO member Turkey was a key regional ally of Israel until the two countries fell out in 2010 over the deadly storming by Israeli commandos of a Turkish aid ship, the Mavi Marmara, bound for Gaza.
But the atmosphere was transformed following the revelation in December that the two sides had met that month in secret talks to seek a rapprochement.
Turkish media reports said high-level Turkish and Israeli delegations held a second round of talks in Geneva earlier this month.
"The sides should show some political will to conclude it," said the official, asking not to be named.
Turkey has repeatedly insisted on three conditions for normalisation: the lifting of the Gaza blockade, compensation for the Mavi Marmara victims and an apology for the incident.
Israel has already apologised and negotiations appear to have made progress on compensation for the victims of the Mavi Marmara raid, which left 10 Turkish aid activists dead.
"We put (forward) our views very clearly," said the Turkish official.
"We asked for an apology, we got it. On compensation, the negotiations are about to be over. The lifting of the Gaza blockade is our third condition."
Turkey's President Recep Tayyip Erdogan had raised hackles in Israel with his sometimes inflammatory rhetoric towards the Jewish state.
But in a highly symbolic encounter, Erdogan last week met representatives of the Conference of Presidents of Major American Jewish Organisations in Ankara.
Participants at the meeting, held at Erdogan's presidential palace, said he expressed hope that relations will get closer.
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