The Moldovan-registered freighter Amalthea left the Greek port of Lavrio late Saturday bound for the Gaza Strip with 2,000 tons of food aid. It is the latest challenge to Israel's continuing maritime blockade of the Hamas-run enclave.
The ship is sponsored by a charity run by Libyan leader Col. Moammar Gadhafi's eldest son, Said al-Islam.
In May, Israeli naval commandos intercepted a much larger flotilla of Turkish aid vessels, an operation that resulted in the deaths of nine activists, including a U.S. citizen.
The ensuing international storm of protest led to the Israelis to remove restrictions on the import of all commercial products into Gaza by land, save for a specific list of materials that can be used or adapted for military purpose.
"We are headed for Gaza. We will not change direction," said Mashallah Zwei of the Gaddafi Foundation, who is one of a dozen Libyan activists on the ship.
Said al-Islam Gaddafi said that despite Israel's threat to intercept it, the Amalthea was still sailing for Gaza.
"I am not deterred by threats," he told Israel's Army Radio. "Our mission is humanitarian and this is not a military operation or an act of terror."
Israeli Foreign Minister Avigdor Lieberman has been engaged in frantic diplomacy to divert the ship to the Egyptian port of Al Arish or to the Israeli port of Ashdod.
"I say very clearly, no ship will arrive in Gaza," he said. "We will not allow our sovereignty to be harmed."
Israeli Defense Minister Ehud Barak said Sunday all the aid onboard the Amalthea could be transferred to Gaza once the cargo has been checked.
"We will not allow the entry of arms, weapons or anything which will support fighting into Gaza," he said.
An Israeli official speaking to ABC News on condition of anonymity today said efforts were being made to persuade the Libyans to change direction and that the ship would otherwise be intercepted.
Given its current speed, the Amalthea is expected to approach Israeli controlled waters off the coast sometime Wednesday.