A UN building hit by Israeli shells during Operation Cast Lead

Israel will pay US $10m in compensation for damage caused to United Nations buildings in Gaza during the assault a year ago, officials have said.

This will be the first compensation paid by Israel for damage caused during the Gaza offensive.

UN storehouses, school buildings, offices and vehicles were damaged or destroyed during the conflict.

Israel insists UN sites were not targeted during the offensive and says the payout is for collateral damage.

Israel also says that Hamas fighters operated in or near UN-protected buildings during the offensive.

The payout is a result of several months negotiation. A UN inquiry in May last year found that Israeli forces had, on seven occasions, "breached the inviolability of United Nations premises" and were responsible for deaths and injuries.

At the time UN Secretary General Ban Ki-Moon said he would seek more than $11m compensation from Israel for damage to UN property.

Israeli officials say that the settlement should be viewed as a good-will gesture and says it has a good working relationship with the UN.

Israel's Defence Minister Ehud Barak personally notified Ban Ki-Moon of the decision, reports say.

In a statement released last month Mr Ban said he was, "deeply concerned that neither the issues that led to this conflict nor its worrying aftermath are being addressed".

Operation Cast Lead lasted three weeks. Palestinians and Israeli human rights groups say about 1,400 Palestinians were killed in the offensive, although Israel puts the figure at 1,166. Thirteen Israelis, including three civilians, died.

According to the United Nations, the offensive left more than 50,000 homes, 800 industrial properties and 200 schools damaged or destroyed, as well as 39 mosques and two churches.