AFP - Israeli and Turkish officials meet on Monday for talks on compensation over a deadly Israeli raid on a Gaza-bound flotilla, which if successful could get the two states' rocky relations back on track.

But demands by families of the Turks who lost their lives in the May 2010 assault by Israeli commandos look set to complicate the high-stakes negotiations.

Once-solid ties between the Jewish state and Turkey hit an all-time low after nine Turkish nationals were killed in the botched raid on a six-ship flotilla heading for the Gaza Strip.

After long refusing Ankara's demand for a formal apology, Israel last month finally made the gesture at the urging of US President Barack Obama.

But for full restoration of ties and re-appointment of its ambassador to Israel, Ankara insists the Jewish state pay compensation for the raid victims and lift its restrictions on Gaza.

The two issues will be the sticking points in the talks that begin on Monday, according to lawyers for the victims' families.

"The families place priority on the lifting of both the embargo and the blockade on Gaza," and want to personally verify that step, lawyer Ramazan Ariturk, representing 430 out of 450 victims' relatives in Turkey, told AFP.

Israel imposed its blockade on Gaza in 2006 after Gaza militants seized an Israeli soldier, who was eventually freed in 2011 in a trade for 1,000 Palestinian prisoners held by Israel.

It was strengthened in 2007, when the Islamist Hamas movement took control of Gaza, then eased somewhat following the international outcry over the killing of the Turkish activists.

Despite the Turkish demands, hopes are high that compensation will not be a stumbling block in normalising ties between the two predominantly non-Arab countries, both of which have the growing chaos of Syria on their doorsteps.

Observers say that the fact that the prime ministers of both countries are directly involved in the process is a reason for optimism.

But Turkish Deputy Prime Minister Bulent Arinc, who will head the delegation at the compensation meeting in Ankara, said earlier this month that an agreement may not be reached if some of the families refused to accept a possible deal between the two governments.

"Compensation would be the last thing we would ask for," said Ismail Bilgen, a son of one of the victims, calling for the removal of the "brutal Israeli blockade on Gaza".

"We want this case to set a precedent, so that Israel will never dare to take such action in the future," he added.

At Monday's talks, the Israeli team is expected to be headed by Yaakov Amidror, the prime minister's national security advisor, and the premier's special envoy Joseph Ciechanover.

Turkish officials said the exact amount Israel would pay would be clarified during the negotiations.

Abdullah Demirel, a lawyer for Mehmet Tunc, a pro-Palestinian activist who was injured on board the lead convoy ship, said that if his client did not get as much as he expected, "he would pursue another court case and if necessary claim his right at international courts."

Tunc would donate the compensation to Hamas or to jihadist organisations, according to his lawyer.

Lawyers are studying international cases for guidance, including the 1988 bomb attack that blew up a PanAm plane over the Scottish town of Lockerbie, killing all of its 250 passengers and crew and 11 more on the ground.

Libya, which took responsibility for the Lockerbie bombing, ended up paying relatives of the victims a total $2.7 billion (2.1 billion euros) in compensation.

Despite the compensation negotiations, pro-Palestinian activists in Turkey say they will not withdraw a lawsuit against four top Israeli military chiefs over the fatal 2010 raid.

The next hearing is scheduled for May 20. Some analysts say Ankara may be using that case as leverage against Israel in the compensation negotiations.

Deputy Prime Minister Arinc has said that "if Israel pays the compensation... then the lawsuits should be withdrawn".

He told the families: "You either accept the compensation, or if you don't you wait for the court decision."