Turkey's Deputy Prime Minister Bulent Arinc also said Turkey was assessing economic and defense deals with Israel in the clearest sign yet it may significantly reduce its ties with once close ally Israel after Monday's raid.
"We may plan to reduce our relations with Israel to a minimum, but to assume everything involving another country is stopped in an instant, to say we have crossed you out of our address book, is not the custom of our state," he told NTV broadcaster.
'We are serious on this issue. New cooperation will not start and relations with Israel will be reduced," said Arinc.
Turkey recalled its ambassador to Israel after the incident and President Abdullah Gul said relations would "never be the same again".
US President Barack Obama said the incident at sea in which nine international pro-Palestinian activists were killed while trying to break the Gaza blockade was tragic but should be used as an opportunity to advance Middle East peace efforts.
A spokeswoman for activists aboard another boat trying to run the blockade said they would continue their voyage. Israel, facing an international outcry over its naval operation on Monday, has vowed to stop the MV Rachel Corrie, named after an activist killed by an Israeli bulldozer in Gaza in 2003.
Israeli Prime Minister Benjamin Netanyahu has ordered Israeli forces to exercise "caution and politeness" in handling the ship. The boat is expected near the waters off Gaza by Saturday.
'Use this tragedy as an opportunity'
Israeli officials have defended their security forces after the nine Turkish nationals were killed aboard the Turkish-flagged vessel boarded by Israeli commandos.
Together with Egypt, Israel tightened its blockade on Gaza after Hamas took control of the coastal enclave in 2007.
Israel has defended the embargo, saying it stops Hamas from bringing in weapons to fight Israel. But officials said on Thursday Netanyahu was considering modifying the blockade.
He is considering some form of international role in enforcing an arms embargo, while letting in civilian goods.
While this week's incident has brought thousands to the streets in other countries, the popular reaction in the Palestinian territories has been limited.
Anticipating possible protests by Palestinians on Friday, Israeli security forces fanned out in Jerusalem, spokesman Micky Rosenfeld said.
Men under the age of 40 would not be allowed into the area near the al-Aqsa mosque, a site that is regularly a flashpoint for confrontation between Palestinians and Israelis.
The United States, which is overseeing indirect Palestinian-Israeli peace talks, has said the incident must not undermine the negotiations. US envoy George Mitchell, who is mediating the talks, on Thursday spoke of progress in talks which many observers doubt will achieve a breakthrough.
Mitchell met Netanyahu on Friday. He held talks with Palestinian President Mahmoud Abbas on Wednesday that a Palestinian official said were dominated by the ship incident and the Gaza blockade.
"I think what's important right now is that we break out of the current impasse, use this tragedy as an opportunity," to advance the Israeli-Palestinian peace process, Obama said in an interview with CNN's Larry King on Thursday.
The United States has been less critical of Israel than other friendly states, expressing sympathy for its security concerns while also saying the people of Gaza must get the supplies they need.
US Vice President Joe Biden has suggested an Israeli probe with international involvement, a proposal embraced by Israel's foreign minister.
AP contributed to the report