Sami Abu-Zuhri, a spokesman for the Islamist Palestinian movement Hamas, addresses a news conference in Istanbul. Reuters

Turkish officials have denied Israeli claims that the Islamist militant group Hamas operates on its territory, following a report that a cell linked to the terror group was being funded and directed from the Muslim-majority country.

According to Israel's Shin Bet security service, a Hamas terror cell in the occupied West Bank plotted a series of attacks on Israeli targets, including Jerusalem's main football stadium and the city's light rail, with direction from Hamas representatives in Turkey.

"It is unthinkable that a Nato member should host a terror organisation that trains and prepares terror attacks in its territory," Israeli sources told The Times of Israel.

However, Turkish officials have denied the claims with diplomats calling the Israeli allegations "lies and deceit".

"Turkey holds dialogue with Hamas but would not under any circumstances allow a terror group to operate from its territory," a Turkish official told Israel's Ynet News.

He said that the allegations were due to sections of the Israeli elite "who will do anything to torpedo efforts to settle the disputes between the countries and turn over a new leaf".

The leader of the Hamas terror cell, allegedly guiding them from Turkey, is believed to be Saleh al-Arouri, a Hamas leader deported from the West Bank to Turkey in 2010, Shin Bet sources revealed.

Many Hamas operatives have been deported from Israel and the Palestinian territories and a number of these are believed to be assisting Arouri in Turkey.

Since its rise to power in 2001, Turkey's ruling AKP party, its Prime Minister Ahmet Davutoglu and President Recep Tayyip Erdogan have had warm ties with the group, giving approximately $200m to the reconstruction effort in Gaza following the recent seven-week conflict.