Britain has denied a report in The Daily Telegraph of a British plan wherein Israel will ease the Gaza siege in exchange for decreased world pressure for an international probe into the events of the Gaza flotilla, the British Embassy in Tel Aviv said in a statement on Wednesday.

"We don't know where the idea of a quid pro quo came from… the Foreign Secretary has made clear that the current restrictions on Gaza must be lifted in line with UNSCR 1860," the statement read.

"In this context, we are of course giving some thought to how this might be done, and discussing with our partners, including Israel. Other partners are doing the same, and we hope that all such discussions will lead to rapid progress on this issue," the statement continued.

The Daily Telegraph reported on Tuesday that Israel is expected to agree to a British proposal in which it will ease the Gaza blockade in exchange for international acceptance of Israel's internal investigation into the events that led up to the deaths of nine Turkish activists aboard a Gaza-bound flotilla last week.

According to the report in the conservative British daily, Britain has taken upon itself a central role in mediating the crisis that has erupted following the Gaza flotilla events and has drawn up a confidential document proposing ways of easing the blockade on Gaza.

Israeli officials said that in light of growing international criticism over Gaza's humanitarian situation, they would agree to permit a substantial amount of aid to pass through Israel's land crossing into the Gaza Strip, the paper reported.

According to the Telegraph, Israeli officials denied any direct link between their readiness to cooperate over the blockade and the decrease in international support for the UN-led proposal for an international probe. However a Western source involved in the discussions with Israel said that there are talks of a mutually beneficial deal.

"A quid pro quo deal is in the offing," said the Western source.

Moreover, British Foreign Secretary William Hague also hinted that pressure for a UN investigation was easing after he said that a probe with simply international presence may also be acceptable.

Echoing countless calls on Israel to subject itself to an international investigation of the events that led up to the deaths of nine Turkish activists aboard a Gaza-bound aid ship last week, the U.S. on Tuesday demanded that some international body be involved in the probe of the events.

This, after a senior official said earlier Tuesday that Prime Minister Benjamin Netanyahu has nearly completed a draft of guidelines for the establishment of a commission of inquiry comprised of Israeli jurists.

The future commission would investigate the clash between Israeli navy commandos who were rappelled onto a Turkish ship, participating in a flotilla attempting to break Israel's three-year blockade on the Gaza Strip and deliver aid, and Turkish activists aboard the ship.

The incident sparked harsh criticism against Israel and international calls for an independent investigation. Israel has so far rejected any external investigation, insisting that any investigation by an external body would be biased against Israel.

"International participation in investigating these matters will be important to the credibility that everybody wants to see," said U.S. State Department spokesman Philip Crowley on Tuesday. "We are discussing with Israel and others the prospective nature of international participation in the investigation. And we're sharing different ideas on how to best accomplish that."

"We want to see an impartial, credible, prompt, thorough investigation. We recognize that international participation, which lends itself to countries and entities being able to vouch for the results of the investigation - will be an essential element to putting this tragedy behind us," he went on to say.

Meanwhile Tuesday, Netanyahu demanded that he and his forum of seven senior ministers be allowed to testify before the investigation committee that will be established, comprised of Israeli jurists, and said that he and his top ministers would supply any future committee with all the required information.

In drafting the guidelines for the future investigation, Netanyahu insisted that Israel Defense Forces soldiers will not be personally interrogated, and asked that the investigation committee use instead the findings of internal military investigations already conducted. Netanyahu added that IDF Chief of Staff would testify.

According to the senior official, the guidelines for the panel of investigation have been almost finalized by the forum of seven during a meeting they held Monday morning. However, the forum is expected to convene an additional meeting on the topic on Wednesday. The draft of the guidelines has been approved unanimously by the forum ministers, who supported Netanyahu's demands.

The Prime Minister's Bureau has neither made the draft public nor the names of the individuals who will serve on the committee. The reason, according to the official, is the fact that the cabinet has yet to complete coordinating the investigation with the U.S. administration and other Western countries in order to ensure their support. The aim, he said, is that these countries will send observers to oversee the investigation. In addition, the official added, conflicts of interest must be examined in regard to the possible members of the investigation panel.

The Prime Minister's Bureau approached several top litigators to inquire whether they would be interested in taking part in the work of the committee. Several of the candidates are former Israeli ambassador to the U.S. Meir Rosen, former legal adviser to Israel's Foreign Ministry Alan Baker, and Bar-Ilan University professor Yaffa Zilbershatz, who is also a candidate to become Israel's next ambassador to the United Nations.