Israel denied Monday reports in the Turkish press that it planned to deploy thousands of troops in Cyprus to protect oil and gas interests in the sensitive region.
"These allegations are baseless and have no connection with reality," the Israeli embassy in Ankara said, quoting a foreign ministry statement. "Israel has never deployed troops on foreign soil."
Turkey's Anatolia news agency quoted a Greek Cypriot official saying that Israel planned to send 20,000 troops to the Greek part of the divided island to protect 30,000 Israelis to be employed in nascent joint oil and gas projects.
Turkey on Friday threatened reprisals against companies bidding for oil and gas drilling projects off Cyprus, in the latest spat between Ankara and the island's internationally recognised government.
The move prompted a sharp response from Cyprus, which condemned this "illegal and provocative attitude of Turkey, which seeks gunboat diplomacy to promote its expansionist designs in Cyprus."
Turkey's warning came after the Cypriot government said 29 companies had made 15 bids for exploratory drilling in a second round of licensing to exploit offshore oil and gas deposits.
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Cyprus has been divided since 1974, when Turkish troops invaded and occupied its northern third in response to an Athens-engineered coup in Nicosia aimed at union with Greece.
US firm Noble Energy said last year it had discovered gas reserves of up to eight trillion cubic feet (226 billion cubic metres) with an estimated value of 100 billion euros ($127 billion).
This would satisfy the eastern Mediterranean island's domestic gas needs for decades.
Turkey says the exploration is an abuse of the rights of Turkish Cypriots to the same resources and has retaliated by launching its own exploratory drilling in the breakaway Turkish Republic of Northern Cyprus (TRNC).
Cypriot President Demetris Christofias has said the island's offshore oil and gas search would carry on regardless of the hostile reaction from Ankara, and that any finds will be used for the benefit of all Cypriots.
Turkey has also been at odds with Israel, once a regional ally, since Israeli commandos in 2010 stormed a Turkish ship carrying activists trying to break Israel's blockade of Palestinian-ruled Gaza, killing nine Turks.
On Thursday the Turkish military said Turkish fighter jets had seen off an Israeli plane that "violated" the airspace of the TRNC, which is only recognised by Ankara.