Israel apologised to Turkey on Friday for killing nine Turkish citizens in a 2010 naval raid on a Gaza-bound flotilla and the two feuding US allies agreed to normalise relations in a surprise breakthrough announced by US President Barack Obama.
The rapprochement could help regional coordination to contain spillover from the Syrian civil war and ease Israel's diplomatic isolation in the Middle East as it faces challenges posed by Iran's nuclear program.
In a statement released by the White House only minutes before Obama ended a visit to Israel, the president said Prime Minister Benjamin Netanyahu and his Turkish counterpart Tayyip Erdogan had spoken by telephone.
"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.
The first conversation between the two leaders since 2011, when Netanyahu phoned to offer help after an earthquake struck Turkey, gave Obama a diplomatic triumph in a visit to Israel and the Palestinian Territories in which he offered no new plan to revive peace talks frozen for nearly three years.
The 30-minute call was made in a runway trailer at Tel Aviv airport, where Obama and Netanyahu huddled before the president boarded Air Force One for a flight to Jordan, US officials said.
Israel bowed to a long-standing demand by Ankara, once a close strategic partner, to apologize formally for the deaths aboard the Turkish vessel Mavi Marmara, which was boarded by Israeli marines who intercepted a flotilla challenging Israel's naval blockade of the Palestinian-run Gaza Strip.
"In light of Israel's investigation into the incident which pointed to a number of operational mistakes, the prime minister expressed Israel's apology to the Turkish people for any mistakes that might have led to the loss of life or injury," Netanyahu's office said in a statement in English.
It added that he had agreed to conclude an agreement on compensation.
Netanyahu and Erdogan "agreed to restore normalization between the two countries, including returning their ambassadors (to their posts)," the statement said.
A statement issued by Erdogan's office said he had "accepted this apology." It also said the Turkish leader told Netanyahu "that he valued centuries-long strong friendship and cooperation between the Turkish and Jewish nations".
A senior US official said Washington believes that its "national security interests" as well as those of its regional allies would be served by normalization of Israeli-Turkish ties.
Ankara expelled Israel's ambassador and froze military cooperation after a U.N. report into the Mavi Marmara incident, released in September 2011, largely exonerated the Jewish state.
Israel had previously balked at apologising to the Turks, saying this would be tantamount to admitting moral culpability and would invite lawsuits against its troops.
Voicing until now only "regret" over the incident, Israel has offered to pay into what it called a "humanitarian fund" through which casualties and their relatives could be compensated.
An Israeli political source said the way to a formal apology was paved by the sidelining of Avigdor Lieberman, who opposed such a move when he served as foreign minister in Netanyahu's previous government.
Lieberman resigned from the post in December after he was indicted on fraud charges. The far-right politician's return to the position in the new Netanyahu-led administration that took office a week ago depends on the outcome of his trial.
A source in Netanyahu's bureau 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 breakdown, Israel and Turkey shared intelligence information and carried out joint military exercises. Israeli pilots trained in Turkish skies, improving their capability to carry out long-range missions such as possible strikes against Iran's nuclear facilities.
In Turkey, Erdogan's success in obtaining an Israeli apology was viewed as a diplomatic coup.
"This is a diplomatic success," Turkish political scientist Ufuk Ulutas said, noting that Turkey "did not take any step back regarding its demands."