Turkey will ban commercial flights to and from Israel unless the families of Gaza flotilla victims receive an apology and compensation, according to Turkish media reports.

Israel's Industry Minister, Benjamin Ben-Eliezer, is said to have told Turkey's Foreign Minister at a secret meeting in Brussels that the Jewish state was rethinking its initial refusal to pay compensation.

It was claimed that the Foreign Minister warned that Turkey would ban flights between the countries unless its demands were met.

Mr Ben-Eliezer's department denied he had made any pledge on possible payments during the meeting, which senior members of both governments are said to have known nothing about.

A Turkish Foreign Ministry spokesman said the country was demanding "an apology, payment of compensation to families of those killed and wounded, an international inquiry and an end to the blockade of Gaza".

There has been increasing tension between the countries since the flotilla incident in May. Last week Turkey banned an Israeli military flight from its airspace in an apparent act of retaliation.

Eight Turkish citizens died after Israeli commandos boarded the flotilla as it approached Gaza.

Israel's inquiry into the incident opened this week.