Turkey was once Israel's closest regional ally but ties collapsed in 2010 over the killing by Israeli marines of 10 Turkish pro-Palestinian activists who tried to break Gaza blockade.
Turkish Foreign Ministry Undersecretary Feridun Sinirlioglu, the Israeli prime minister's special envoy, Joseph Ciechanover, and Israeli military official Jacob Nagel, met in London on Thursday, the Turkish ministry said in a statement.
"The teams made progress towards finalizing the agreement and closing the gaps, and agreed that the deal will be finalized in the next meeting which will be convened very soon," the ministry said.
It did not say what form a deal might take but Ankara has always insisted there can be no normalization in ties with Israel unless its conditions for ending the Gaza blockade and compensation for the deaths of the activists are met, Reuters reported.