A Tel Aviv court has found former premier Ehud Olmert guilty of bribery linked to a Jerusalem property development, in one of the worst corruption scandals in Israeli history.

At a lengthy hearing in Tel Aviv District Court on Monday presided over by Judge David Rosen, Olmert was convicted on two counts of bribery, making him the first former premier to be convicted of the offence and of perjury.

The trial, which included 16 defendants and took place over two years, was linked to the construction of the massive Holyland residential complex when Olmert served as the city's mayor.

In 2010, Olmert was named the key suspect in the so-called Holyland affair on suspicion that he received bribes totalling some $430,000, although the prosecution later reduced the sum received by about half.

The 68-year-old and several of his associates were accused of helping the towering construction project, which is widely reviled as a major blot on the city's skyline, to pass various legal and planning obstacles.

"We're talking about corrupt and filthy practices," Judge Rosen said, his remarks playing out across all Israeli media.

He also spoke of a "corrupt political system which has decayed over the years... and in which hundreds of thousands of shekels [Israeli currency] were transferred to elected officials".

Rosen also said the former premier had lied to the court in a bid to "blacken the name" of the state's witness in a verdict which found 13 of the 16 defendants guilty.

Possible prison sentence

It was not immediately clear when the court would pass sentence, but some commentators suggested that he could face a prison sentence.

"You are talking about a man who has already been convicted of corruption in a previous case at Jerusalem District Court," said Moshe HaNegbi, legal commentator for public radio.

"I don't see a situation, under these circumstances, where the prosecution does not ask for several years' jail time."

In July 2012, a Jerusalem court found Olmert guilty of breach of trust but cleared him on two more serious charges related to the alleged receipt of cash-stuffed envelopes and multiple billing for trips abroad.

He was fined $19,000 and given a suspended jail sentence for corruption.

The conviction related to favours that Olmert granted a former colleague while serving as trade and industry minister.

The Haifa-born politician was mayor of Jerusalem from 1993 to 2003, after which he served as a cabinet minister, holding the trade and industry portfolio as well as several others.

He became premier in 2006, leading the centre-right Kadima party into government. As prime minister, Olmert waged war against Hezbollah in Lebanon in 2006 and Hamas in the Gaza Strip in 2008. He resigned in September 2008 after police recommended that he be indicted in several corruption cases.