Months of effort by diplomats to find a word between regret and remorse ended in failure yesterday, forcing the head of a UN inquiry panel to shelve a report he intended to issue on the clash last year in which Israeli naval commandos shot dead nine Turkish pro-Palestinian activists.

Sir Geoffrey Palmer, former Prime Minister of New Zealand, was to issue his long-awaited findings yesterday but held off in the hope that Turkey and Israel could come up with a formulation to heal the deep rift.

Turkey is insisting that Israel apologise for the incident and pay compensation to the families of those killed.

Israel has expressed willingness to pay compensation and to publicly express sorrow at the deaths of the men but not to apologise. It maintains its commandos, lowered from a helicopter on to a Turkish vessel trying to break Israel's naval blockade of Gaza, were attacked with knives and metal staves before their feet even touched the deck. Both sides - close allies in the recent past - have been searching for ways to ease the tension but neither would compromise on the apology issue, which they deemed a matter of principle.

"Diplomats have been working like linguists to find a word that will sound like an apology in Turkish but won't sound like an apology in Hebrew," wrote the Turkish newspaper Hurrriyet this week.

Turkish Foreign Minister Ahmet Davutoglu said yesterday that Turkey will continue to demand an Israeli apology. "We've been saying the same thing since last year." Israeli Foreign Minister Avigdor Lieberman was equally adamant. "I will not harm Israel's national dignity or see our soldiers humiliated with an apology."

Palmer's four-man committee, appointed last August by UN Secretary-General Ban Ki Moon, consisted of former Colombia President Alvaro Uribe and representatives of Turkey and Israel. According to press reports, the findings contain harsh criticism of both sides but conclude that the Israeli blockade of Gaza was legal, contrary to the Turkish position.

It also reportedly links the Turkish authorities with the principal organisers of last year's flotilla, the IHH, a Turkish humanitarian relief fund which allegedly has a radical Islamic anti-Western orientation.

The committee reportedly rapped Israel for using excessive force and for interdicting the convoy "too soon", presumably a reference to the interception being made well out to sea rather than off Gaza's coast.

Turkish Prime Minister Recep Tayyip Erdogan attacked Israel relentlessly after the flotilla incident.

However, in recent months he has refrained from anti-Israel statements, lending apparent substance to reports of behind-the-scenes efforts at conciliation.

The Tel Aviv daily Yediot Achronot reported this week that Turkey has involved itself in efforts to win the release of Gilad Shalit, the Israeli soldier who has been held captive by Hamas in the Gaza Strip for the past five years.