At least four Palestinian militants dressed in diving gear were killed by the Israeli military today, according to both Israeli and Palestinian security officials.
The Israeli military claims the men were preparing an attack on Israeli targets from the Gaza Strip.
Palestinian sources in Gaza claimed the men were members of the Al Aqsa Martyrs' Brigade, a radical offshoot of the mainstream Fatah organization which is affiliated with Mahmoud Abbas, the head of the moderate regime that governs the West Bank.
The divers were training about 150 yards off shore when they were spotted by a passing and attacked by a Israeli patrol.
The incident comes just a week after nine Turkish activists were killed by Israeli commandos in international waters as their convoy of ships trying to deliver aid to Gaza was intercepted by the Israeli navy.
That incident has led to a diplomatic crisis for Israel and in particular a rift in relations with Turkey, once Israel's closest regional ally.
The government of Prime Minister Benjamin Netanyahu is under enormous international pressure to investigate the incident and to rethink its current blockade of the Hamas-run Gaza Strip.
Israel's ally in enforcing the blockade, Egypt, temporarily opened one of its border crossings last week. Today, an Egyptian official told the Associated Press that Egypt will keep its border with Gaza open indefinitely, easing the blockade on the territory's Palestinians.
All day Sunday the Israeli cabinet met to discuss how best to respond to the growing criticism, but appeared defiant over demands to accept international involvement in any inquiry.
Israel's ambassador in Washington, Michael Oren, told Fox News Sunday: "We are rejecting an international commission. We are discussing with the Obama administration a way in which our inquiry will take place."
On Sunday Netanyahu spoke with United Nations Secretary General Ban Ki Moon who proposed a panel headed by Geoffrey Palmer, the former prime minister of New Zealand. Netanyahu reportedly rejected this proposal.
The Turkish Foreign Minister Ahmet Davutoglu told CNN his country is insisting on a fully independent commission. "We want to know the facts. If Israel rejects this, it means it is also another proof of their guilt. They are not self confident to face the facts."
Newspapers in both countries have been displaying photographs taken aboard one of the vessels during last week's violent operation.
They show the first Israeli commandos to board the largest vessel, beaten and disarmed by the activists from a pro-Palestinian Islamic charity IHH.
Meanwhile the Iranian Red Crescent has said it will send two more ships to Gaza at the end of this week. On Sunday a spokesman from the country's Revolutionary Guard said it would be willing to protect future aid convoys to Gaza.
"Iran's Revolutionary Guards naval forces are fully prepared to escort the peace and freedom convoys to Gaza with all their powers and capabilities," he said.
Both moves will ensure continuing tension in the region and may likely lead to further confrontation in the waters off Gaza.