James Packer's lawyer asked about arranging citizenship or residency in Israel for the Australian billionaire, the country's Interior Minister says, in a move that could bring Mr Packer significant tax benefits.

Key points: James Packer reportedly gave lavish gifts to Benjamin Netanyahu and his family

James Packer reportedly gave lavish gifts to Benjamin Netanyahu and his family Israel's Interior Minister confirmed he met Mr Packer's lawyer to discuss citizenship and residency

Israel's Interior Minister confirmed he met Mr Packer's lawyer to discuss citizenship and residency A criminal investigation is underway into corruption allegations against Mr Netanyahu

Mr Packer has found himself caught in the middle of a major corruption inquiry that has rocked the Middle Eastern country.

His name has been splashed across headlines and in nightly TV reports. He is accused of giving lavish gifts to Israeli Prime Minister Benjamin Netanyahu and his family.

Israel's Interior Minister told the ABC he met with Mr Packer's lawyer.

Mr Packer did not respond to 7.30's questions about residency, nor did he answer any questions about his relationship with Mr Netanyahu.

7.30 has no evidence to suggest Mr Packer tried to bribe anyone in Israel.

Packer bought home next door to Netanyahu

James Packer became part of a close circle of billionaires that Benjamin Netanyahu surrounded himself with. ( AAP: Joe Castro )

The relationship between one of Australia's richest men and the Prime Minister of Israel can be traced back to a star-studded dinner held in Mr Netanyahu's honour in March, 2014.

The evening's host was Hollywood producer and Israeli billionaire businessman Arnon Milchan. There — but hiding from the cameras — was the party's co-host, Mr Packer.

"Mr Milchan was the guy who brought him to Israel, who introduced him to the Prime Minister," Raviv Drucker, one of Israel's most high-profile investigative journalists, told 7.30.

"Milchan knew Mr Packer's father, so they are very close."

Mr Milchan was already part of a close circle of billionaires Mr Netanyahu surrounded himself with. Mr Packer soon became part of the pack.

His relationship with Mr Netanyahu quickly developed.

Mr Packer purchased a million-dollar beachfront mansion in Israel right next door to the private home of Mr Netanyahu, and began making substantial investments in Israel's booming tech market.

In March 2015, Mr Packer was a surprise special guest in the audience when Mr Netanyahu addressed the US Congress in Washington.

Mr Packer then appeared at another speech Mr Netanyahu gave to the UN General Assembly in New York later that year, standing with senior Israeli officials and the Netanyahu family.

Questions were being asked.

'A friend of the family'

Israeli Prime Minister Benjamin Netanyahu has been questioned three times in the past month by police from the national anti-fraud unit. ( Reuters: Kevin Lamarque )

A recent TV report by Drucker on Mr Packer's relationship with the Prime Minister sent shockwaves across Israel.

The report alleged Mr Packer showered lavish treatment on the Prime Minister's family, particularly on his 25-year-old son, Yair.

The report claimed Mr Packer gave Yair numerous free luxurious holidays at properties he owns and rents around the world.

A spokesperson for Mr Netanyahu told Channel 10 Israel Mr Packer was "a friend of the family" and Yair, "has the right to be hosted by friends".

A few weeks after Drucker's report, Israel's Attorney-General announced a corruption probe into the Prime Minister's dealings had been upgraded to a criminal investigation.

Since January 2, Mr Netanyahu has been questioned three times by police from the national anti-fraud unit, with the latest questioning taking place last Friday. Yair has reportedly also been questioned.

"Packer and his friend, Arnon Milchan … are paying together for all kinds of luxuries for the Prime Minister and his wife," Drucker told 7.30.

"Champagne, cigars, a gourmet chef that will come and prepare them all kinds of meals in their house.

"And they are paying together. Packer is involving and Milchan is involving."

Mr Netanyahu has been adamant there is nothing wrong with receiving gifts.

"What kind of a scandal is this? An entire investigation is being conducted on television. Every evening edited, cherry-picked transcripts and lies are spread regarding both matters at hand," he said.

Drucker said he expected Israeli authorities would want to question Mr Packer next time he was in the country.

"I'm not saying he will be in a position of a suspect. Maybe he will be in a position of a witness," he said.

Implications in Australia

People in Australia are watching the developments closely, as Mr Packer's position on the board of Crown Casinos could depend on what the Israeli authorities find.

"I've no doubt he's got the very best advisers in the world and I trust that they would be advising him to act very cautiously in relation to these matters," Anthony Whealy QC, of Transparency International, said.

"Because as the figurehead of the Crown organisation, those licences would be under attack if there were any personal wrongdoing on his part."

Independent senator Nick Xenophon said he would be surprised if there was not an Australian investigation into the allegations.

"It's been big news in Israel, it also needs to be big news here in Australia," Mr Xenophon said.

"Mr Packer needs to be given an opportunity to explain himself. But on the face of it, it would seem extraordinary if the AFP [Australian Federal Police] did not conduct a thorough investigation of these very serious allegations."

The AFP told 7.30 it did not confirm who it was investigating, but the ABC understands there is no active inquiry into Mr Packer's dealings in Israel.