Turkey is "totally suspending" all trade, military and defence industry ties with Israel, the Turkish prime minister said.
"Trade ties, military ties, regarding defence industry ties, we are completely suspending them," Recep Tayyip Erdogan, said in Ankara on Tuesday.
"This process will be followed by different measures," said Erdogan, who referred to Israel as "a spoiled child".
Turkey has not frozen military ties with Israel, Amos Gilad, the head of the Israeli defence ministry’s diplomatic-security bureau, told Israel’s Army Radio, saying that the Israeli military attache in Turkey is still serving as usual.
"Turkey has a lot to lose from making this kind of extreme decision," Gilad said.
The call to suspend the ties comes a day after the Turkish minister of economy had said that bilateral commercial ties would continue as usual, Al Jazeera’s Serpil Karacan reported from Istanbul.
Suspension of "the miiltary ties is very significant between the two countries to the degree that it’ll have some impact on Turkey as well, especially for the Heron planes and especially for military intelligence," she said.
Turkey downgraded diplomatic relations with its former ally to the level of second secretary last week after Israel refused to apologise for the deadly Israeli raid on a Gaza-bound Turkish-flagged protest flotilla that killed nine pro-Palestinian activists last year.
On Friday, Turkey expelled the Israeli ambassador in Ankara, suspended military deals and vowed a greater naval presence in the eastern Mediterranean Sea.
Erdogan said the Israeli diplomats who had been ordered out of Turkey must leave by Wednesday.
Last week, a United Nations-mandated inquiry into the deadly Israeli attack on the flotilla said Israel’s action were "excessive".
"Israel’s decision to board the vessels with such substantial force at a great distance from the blockade zone and with no final warning immediately prior to the boarding was excessive and unreasonable," the inquiry says.
The UN investigation into the events on the Turkish-flagged ship known as the Mavi Marmara, the largest of six vessels that were commandeered by Israeli commandos on May 31, 2010, was headed by Sir Geoffrey Palmer, a former prime minister of New Zealand, aided by Alvaro Uribe, the former Colombian president, along with a representative each from Israel and Turkey.
It said, however, that the flotilla "acted recklessly in attempting to breach the naval blockade" set up by Israel around Gaza.
The inquiry called for Israel to make "an appropriate statement of regret" for the raid and pay compensation to the families of the dead as well as to injured victims.
Turkey and Israel should resume full diplomatic relations "repairing their relationship in the interests of stability in the Middle East," the report said.
Gaza Trip Hinted
Erdogan hinted on Tuesday that he might make a visit to Gaza, though adding that no final decision had been made yet.
"We are talking with the Egyptians on this matter … A trip to Gaza is not finalised yet," Erdogan, who is due to visit Egypt next week.
Israel has expressed regret for the loss of lives in the 2010 flotilla raid but refused to issue an apology for what they say was their soldiers’ act of "self-defence".
Karacan said the tension between Israel and Turkey was deeply rooted and had escalated as Ankara displayed an active interest in the Palestinian question.
"Israel was never happy that Turkey had a more Islamist-inclined government that shows more interest in the Palestinian question and takes it to heart and supports it in all international platforms," she said.
(Al Jazeera and Agencies)