ISTANBUL - Turkey must accept that it needs Israel, President RecepTayyipErdogan said Saturday, as the two countries seek to thrash out a deal on normalising ties.

NATO member Turkey was a key regional ally of Israel until the two countries fell out over the deadly storming by Israeli commandos in 2010 of a Turkish aid ship, the Mavi Marmara, bound for Gaza.

Erdogan further raised hackles in Israel with his sometimes inflammatory rhetoric towards the Jewish State. But the atmosphere has transformed following the revelation last month the two sides were making progress in secret talks to seek a rapprochement, says

"Israel is in need of a country like Turkey in the region," Erdogan said in remarks to Turkish reporters published in leading dailies Saturday.

"And we too must accept that we need Israel. This is a reality in the region," said Erdogan.

"If mutual steps are implemented based on sincerity, then normalisation will follow."

Ambassadors were withdrawn in the wake of the 2010 crisis and Erdogan said Turkey's three conditions for a normalisation were clear -- a lifting of the Gaza blockade, compensation for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, leaving the blockade on the Hamas-ruled Gaza Strip the main hurdle.

Indicating possible progress on the blockade, Erdogan said Israel had suggested it would allow goods and construction materials into Gaza if they came via Turkey.(AFP)