Asked by CNN why Turkey excluded Israel from the exercise, Davutoglu said, "We hope that the situation in Gaza will be improved, that the situation will be back to the diplomatic track. And that will create a new atmosphere in Turkish-Israeli relations as well. But in the existing situation, of course, we are criticizing this approach, (the) Israeli approach."
Turkey canceled an annual joint air force drill that was to have taken place this week because it opposed Israeli participation, the Israeli military said, in the latest sign of deteriorating relations between the two countries.
Davutoglu told CNN that instead of the NATO exercise, Turkey would be conducting "a national military exercise now after consultations with all the parties involved."
Turkey, a secular country ruled by an Islamic-oriented party, had long been Israel's best friend in the Muslim world. But ties have cooled sharply over Turkish Prime Minister Recep Tayyip Erdogan's sharp criticism of Israel's winter war in the Gaza Strip.
The Israel Air Force recently concluded its preparations for the drill, but several days ago the Israel Defense Forces was informed that it would not be invited to take part in the exercise this year.
A spokeswoman for the US Embassy in Ankara was quoted by CNN as saying that the United States and its allies postponed the exercise "in hopes of re-scheduling it."
"We look at this as a postponement, not a cancellation," Embassy spokeswoman Deborah Guido told CNN.
Hanan Greenberg and AP contributed to the report