Israel and Turkey are working to resolve the diplomatic differences that have clouded the once "strategic" relationship between the two countries.

Israeli officials have interpreted the recent announcement by Turkish movement IHH that it would not be participating in the upcoming flotilla to Gaza as a signal of the willingness of the government in Ankara to improve relations.

A combination of factors, including the re-election of Prime Minister Reccep Tayyep Erdogan last week for a third term of office, the tense situation in Syria and American pressure appear to have brought about the shift in positions.

Over the past few weeks, senior representatives of both countries have been meeting to work on reconciliation. One of the keys will be some form of apology by Israel for the flotilla incident in May 2010, in which Israeli naval commandos killed nine Turkish activists.

Next month, a United Nations commission will deliver its report on the incident. Both the Israeli and Turkish governments have already seen the report, which has been described as "even-handed" and seems to pave the way for a rapprochement. Both countries also share concerns over the growing chaos in Syria, which resulted two weeks ago in an influx of refugees into Turkey. Mr Erdogan, a former ally of Syrian President Bashar al-Assad, has recently become his critic and, now that he has been re-elected, can afford to be seen to be forging a closer relationship with Israel.

The fact that the Turkish Islamist movement IHH, the organisers of last year's flotilla, announced last weekend that they would not participate in the flotilla which is slated to set sail in two weeks, is also seen as significant. "The Turkish government said that they had no influence on IHH," said a senior defence official this week, "but it is certainly uncanny that shortly after the elections, they suddenly announced that they were withdrawing from the flotilla. We are very aware of what is happening in Turkey and hope that it signals a willingness to improve ties."

The relationship swiftly deteriorated following the Gaza operation at the end of 2008 - which Mr Erdogan criticised bitterly - and took a nose-dive following the flotilla incident.

In a letter last week to Mr Erdogan, congratulating him on his re-election, Israeli Prime Minister Binyamin Netanyahu wrote: "I hope we can re-establish the co-operation and renew the spirit of friendship that characterised the relations between our two nations for many generations," and promised his government would try to find solutions to the disputes between the two countries.

Despite the IHH pulling out, the Israeli Navy is still preparing for a tense confrontation with the flotilla in a few weeks. Last Wednesday it carried out a major exercise to rehearse various scenarios at sea.

"It is certainly a major help that the IHH won't be there," said a senior naval officer, "but we are still preparing for violence: we know of Yemeni, Palestinian and Jordanian activists who are planning to show us that they are every bit as tough as the Turks."