Israel will set up its own internal investigation into the events surrounding its raid last month on a convoy of Gaza-bound aid ships, Prime Minister Benjamin Netanyahu's office said tonight.

Israel rejected a UN proposal for an international panel to investigate the deadly 31 May interception of the flotilla, but it agreed to include two foreign observers in its own inquiry.

The final decision on the internal probe will be voted on by the government tomorrow, Mr Netanyahu's office said in a statement.