Israel's cabinet on Monday backed the creation of an internal committee to probe its deadly raid on a Gaza-bound aid flotilla, in a move swiftly dismissed by both Turkey and the Palestinians.
The committee, which will include two foreign observers, will look into the legal aspects of the operation in which Israeli commandos killed nine Turkish activists.
Ankara swiftly dismissed the move, saying Israel was incapable of being "impartial," and Palestinian leader Mahmud Abbas said setting up an internal committee did not not comply with UN demands.
"The proposition made today for the inquiry committee does not correspond to the request of the Security Council," Abbas said. Turkey has threatened to review its ties with Israel if it does not heed calls for an independent probe. "We have no trust at all that Israel... will conduct an impartial investigation," Foreign Minister Ahmet Davutoglu said.
The Turkish foreign ministry later said in a statement that Ankara "strongly condemns" Israel's failure to respond to a proposal by UN chief Ban Ki-moon to set up a commission made up of "one Turkish, one Israeli and three international experts."
"We expect the international community and primarily the United States... to support this constructive proposal and take action as soon as possible," it said.
Ban's office said on Monday that his proposal for a credible international inquiry is still on the table.
"A thorough Israeli investigation is important and could fit with the secretary general's proposal which would fully meet the international community's expectations for a credible and impartial investigation," his spokesman said.
Washington called the Israeli move an "important step forward," but stressed the inquiry should be carried out promptly and its findings "presented publicly" to the international community.
Israel has made clear the committee will not hear direct testimony from troops involved in the raid.