An Israeli court has convicted former prime minister Ehud Olmert of bribery over his ties to a real estate deal while in his previous post of Jerusalem mayor.

Olmert, a centrist credited internationally with working towards a peace settlement with the Palestinians, had denied wrongdoing in the Holyland apartment complex deal, as well as other corruption allegations that forced his resignation as premier in 2008.

The 68-year-old, who could face up to 10 years in prison when sentencing is handed down at a later date, will appeal the verdict, his spokesman Jacob Galanti said.

In 2012, Olmert was acquitted of major charges in separate cases involving his links to a US businessman while he was Jerusalem mayor and an Israeli cabinet minister.

Prosecutors alleged he accepted more than $228,000 from developers of the Holyland project.

Handing down the conviction, judge David Rozen told Tel Aviv district court that the case "exposed governance that grew more corrupt and rotten over the years", with bribes paid to public officials.

In recent months, Olmert has been critical of prime minister Benjamin Netanyahu's policies toward the Palestinians and confronting Iran's nuclear program, fuelling speculation he intended to return to politics.

A lawyer by profession, Olmert began his political career in the 1970s as a legislator who targeted organised crime in Israel.

He served as mayor of Jerusalem from 1993 to 2003 and as prime minister from 2006 to 2009, staying in office in a caretaker capacity until after a general election that brought Mr Netanyahu to power.

As prime minister, Olmert waged war against militants in Lebanon in 2006 and the Gaza Strip in 2008.

He said he had achieved significant progress in talks with the Palestinians aimed at securing a final peace deal, offering an Israeli withdrawal from much of the occupied West Bank.

But no agreement was reached.

Current US-brokered peace talks between the Netanyahu government and the Palestinians have faltered, with Washington struggling to keep negotiations going beyond an original April 29 target date for a deal.

Olmert was among 13 defendants in the Holyland case, which revolved around the construction of a hulking hilltop housing project widely regarded as Jerusalem's worst eyesore.

One of the accused, Shula Zaken, was Olmert's former long-time aide who last week offered to turn state's witness against him.

Reuters