ANKARA, May 24 (Jonathon Burch and Tulay Karadeniz/Reuters) - A Turkish lawyer said on Thursday that Israel had offered to pay $6 million to victims of Israel's storming of a Gaza-bound Turkish aid flotilla to settle lawsuits against the Israeli military.

However, a senior Israeli official who declined to be named said that Israel, having indicated last year that it was prepared to indemnify victims without accepting blame, had not renewed its offer.

Turkey and Israel fell out badly in 2010 when Israeli commandos stormed the Mavi Marmara aid ship to enforce a naval blockade of the Palestinian-run Gaza Strip and killed nine Turks in clashes with activists.

Ramazan Ariturk, one of several lawyers representing 465 victims and victims' relatives, told Reuters that the Israeli government had made a proposal to him through an intermediary foreign ambassador in Ankara just over one month ago.

He said the money would have been paid to a Jewish foundation in Turkey for distribution, and been followed by a statement of regret for the raid by the Israeli government.

I told the ambassador I did not think the offer was appropriate or moral and also discussed the issue with the victims and their friends and they also stated that they could not accept this, Ariturk said.

The Turkish Foreign Ministry agreed with his decision, saying Israel should have contacted it directly, he said.

Ariturk declined to disclose the nationality of the ambassador or reveal the name of the Jewish foundation to which the payment would have been made.

The Turkish Foreign Ministry could not be reached for immediate comment, while Mark Regev, spokesman for Israeli Prime Minister Benjamin Netanyahu, declined to comment.

Turkey expelled Israel's ambassador and froze all military cooperation with its former ally after a U.N. report into the incident last September largely exonerated the Jewish state.

Turkey has demanded a formal apology from Israel alongside compensation for victims and the families of the dead, but Netanyahu has only voiced regret.

On Wednesday an Istanbul prosecutor submitted an indictment seeking life sentences for four former Israeli military commanders in connection with the raid, including the Chief of General Staff at the time.

The U.N. report on the raid last September was meant to encourage a rapprochement but ultimately deepened the rift when it concluded Israel had used unreasonable force but that its blockade of Gaza was legal.

Israel said its marines had been attacked by activists wielding metal bars, clubs and knives when they boarded the Mavi Marmara, and had opened fire in self-defense. (Writing by Jonathon Burch; Editing by Kevin Liffey)