JERUSALEM, June 6 (Jeffrey Heller/Reuters) - Israel rejected on Sunday a proposal by UN Secretary-General Ban Ki-Moon for an international investigation into its deadly raid on a Gaza-bound aid ship and said it had the right to launch its own inquiry.

We are rejecting an international commission. We are discussing with the Obama administration a way in which our inquiry will take place, Michael Oren, Israel's ambassador to Washington, said on the US TV program Fox News Sunday.

The UN chief had suggested establishing a panel that would be headed by former New Zealand prime minister Geoffrey Palmer and include representatives from Turkey, Israel and the United States, an Israeli official said earlier in Jerusalem.

Netanyahu discussed the proposal for a multinational panel with Ban in a telephone call on Saturday but told cabinet ministers from his right-wing Likud party on Sunday that Israel was exploring other options, political sources said.

Nine Turks were killed on Monday in the Israeli commando raid on the Mavi Marmara, part of a six-vessel convoy that set out to challenge an Israeli-led blockade of the Gaza Strip.

Israel has said its troops used lethal force in self-defense after they were set upon by pro-Palestinian activists wielding clubs and knives.

Israeli leaders have spoken publicly about setting up an internal investigation with foreign observers into the interception of the Turkish-flagged ship off the coast of Gaza, an enclave run by Hamas Islamists who oppose Western-backed Palestinian President Mahmoud Abbas's peace efforts with Israel.

Israel is a democratic nation. Israel has the ability and the right to investigate itself, not to be investigated by any international board, Oren said.

Turkish Foreign Minister Ahmet Davutoglu, speaking on CNN, said Ankara would insist on an independent commission and suggested that Israel's rejection of an international inquiry showed it wanted to cover up the facts of the raid.

We want to know the facts. If Israel rejects this, it means it is also another proof of their guilt. They are not self-confident to face the facts, he said.

Turkey's relations with Israel, once a close ally, have soured badly since the deadly raid.


SECOND INTERCEPTION

Israel's navy boarded another ship carrying aid and pro-Palestinian activists to Gaza on Saturday. Its interception of the Irish-owned MV Rachel Corrie ended without violence following diplomatic efforts to avoid bloodshed.

I want to pay tribute to the crew of the Rachel Corrie for demonstrating in no uncertain terms their peaceful intentions, Irish Foreign Minister Micheal Martin told Irish public radio RTE. We of course communicated that relentlessly to the Israeli authorities.

An Israeli official said Israel wanted to establish whether the Turkish government had sponsored the Mavi Marmara, where the strength of the resistance to the boarding party appeared to have caught the Israeli military off guard. Israel has said seven of its troops were wounded.

Netanyahu said at the start of his weekly cabinet meeting that a smaller group of violent extremists had boarded the ship separately with the intention of clashing with troops.

Photographs obtained by Reuters on Sunday that were shot on board the Mavi Marmara showed bleeding and cowering Israeli troops surrounded by activists.

The photographs were taken by a member of the Foundation for Human Rights and Freedoms and Humanitarian Aid, or IHH, which organised the convoy, said spokesman Salih Bilici.

Israeli authorities confiscated activists' cameras and erased the memory cards but the IHH was able to recover photos on one camera using special software, Bilici said.

There are no pictures of outright violence but many of the photographs show puddles of blood on the floor or streaks smeared across walls.

Israel has said it must prevent arms smuggling to Gaza, and French Foreign Minister Bernard Kouchner said on Sunday the European Union could help monitor traffic into the territory.

We can propose again that the European Union, European countries, monitor this passage in a very strict manner ... We can very well monitor the cargoes of ships going to Gaza, he told reporters.

France and Britain offered to send warships to monitor and prevent arms smuggling to Gaza following Israel's 22-day offensive in the Palestinian Hamas-ruled territory that ended in January last year.

Together with Egypt, Israel tightened its blockade on the Gaza Strip after Hamas Islamists took over the coastal territory in 2007 in fighting with forces loyal to Western-backed Palestinian President Mahmoud Abbas.

World pressure has mounted on Israel to lift the blockade which the U.N. said has caused a humanitarian crisis in the Gaza Strip and hampers efforts to rebuild homes and infrastructure destroyed in a 2009 war. Israel says its frequent transfer of basic goods to the territory has staved off any such crisis. (Additional reporting by Philip Barbara in Washington, Ari Rabinovitch in Jerusalem and Dublin, Istanbul and Paris bureaux; Editing by Charles Dick)