In a dramatic development that occurred just as US President Barack Obama was leaving the country, Prime Minister Binyamin Netanyahu spoke with Turkey's Tayyip Erdogan for the first time since the Israeli prime minister took power in 2009.

Netanyahu voiced regret for the loss of life in the 2010 Mavi Marmara incident, apologizing for any mistakes that led to the death of nine Turkish activists. Breaking a three-year deadlock, the two agreed to normalize relations.

"Prime Minister Netanyahu expressed an apology to the Turkish people for any error that may have led to the loss of life, and agreed to complete the agreement for compensation," the statement said.

The conversation was facilitated by US President Barack Obama, taking place during Obama's prolonged meeting with Netanyahu on Friday afternoon.

"The United States deeply values our close partnerships with both Turkey and Israel, and we attach great importance to the restoration of positive relations between them in order to advance regional peace and security," Obama said in the statement released by the White House just before he ended a visit to Israel.

"I am hopeful that today's exchange between the two leaders will enable them to engage in deeper cooperation on this and a range of other challenges and opportunities," the president said.

Turkey, for its part, agreed to drop all charges against a group of former Israeli military commanders including former chief of staff Lt.-Gen. (res.) Gabi Ashkenazi.

Erdogan underlined the importance of strong cooperation and friendship between the Turkish and Jewish nations in a telephone conversation with his Israeli counterpart on Friday, his office said.

"Erdogan told Binyamin Netanyahu that he valued centuries-long strong friendship and cooperation between the Turkish and Jewish nations," the statement from Erdogan's office said.

Netanyahu said to Erdogan that he had a good discussion with Obama about regional cooperation, and the importance of Israeli-Turkish ties. The prime minister expressed regret at the deterioration of those ties, and committed himself to resolving their differences in the aim of promoting peace and regional stability.

Netanyahu said he saw the interview that Erdogan gave the Danish newspaper recently, in which Erdogan stepped back from his statement equating Zionism with racism, and Netanyahu expressed his appreciation for the clarification.

Erdogan had told Denmark’s Politiken newspaper that he would not take back his comments from several weeks ago that Zionism was a crime against humanity. He did, however, try to explain them as a misunderstanding.“My several statements openly condemning anti-Semitism clearly display my position on this issue. In this context, I stand behind my remarks in Vienna,” said Erdogan in the interview, which was published Wednesday.

During the phone-call, Netanyahu made clear that the tragic results of the Mavi Marmara were not intended, and that Israel expresses its regret at the injuries and loss of life.

In light of the Israeli investigation of the incident, there were found to be a number of operational mistakes, and Netanyahu apologized to the Turkish people for any mistake that could lead to the loss of life, and agreed to pay compensation.

Voicing until now only "regret" over the Mavi Marmara incident, Israel has offered to pay into what it called a "humanitarian fund" through which casualties and their relatives could be compensated.

Netanyahu, relating to Erdogan's demands that Israel lift the blockade of Gaza, pointed out that Israel has already lifted some limitations including the passage of goods and people to the Palestinian territories, including Gaza, and that this will continue as long as quiet is preserved.

The two leaders agreed to continue to work together in order to improve the humanitarian situation in the Palestinian territories and Syria.

A source in Netanyahu's office said opening a new chapter with Turkey "can be very, very important for the future, regarding what happens with Syria but not just what happens with Syria".

Before the diplomatic break, Israeli pilots trained in Turkish skies, exercises widely seen as improving their capability to carry out long-range missions such as possible strikes against Iran's nuclear facilities.

Reuters contributed to this report.

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