[A] Western source close to international discussions with Israel said: A quid pro quo deal is in the offing.

William Hague, the Foreign Secretary, also hinted that pressure for a UN investigation was easing by declaring that an inquiry with an international presence might be acceptable.

The Israeli government has proposed conducting its own judicial investigation, possibly in the presence of one or two American observers, but has ruled out questioning soldiers or officers involved in the raid.

According to Western sources, many of the British proposals have been adopted by the Quartet on the Middle East peace, the negotiating body that comprises the UN, the United States, the European Union and Russia.

They include calls for Israel to abandon its official list of 35 items whose entry into Gaza is allowed in favour of a list of specifically outlawed items.

Israel has also been asked to ease access into Gaza at its land crossings, where there are frequent bottlenecks, and to allow the UN to transport construction materials and equipment needed to rebuild 60,000 homes destroyed or damaged during the Gaza war of December, 2008.

The Israeli government is understood to have signalled its acceptance of most of these conditions.

Israel could be flexible about items reaching the civilian population, an Israeli official said.

He added that some construction materials like cement, which could be used to construct military bunkers, could be allowed in under third-party guarantees, meaning that the UN would be responsible for ensuring that such materials did not fall into the hands of Hamas.

But one part of the British proposal - to ease Israel's naval blockade of Gaza - is understood to have failed after encountering Israeli resistance.

Britain had suggested forming an international maritime force that would have seen all ships searched by Israeli and foreign inspectors before being allowed to dock in Gaza.

Israel is insisting that it must be allowed full control of Gaza's waters.