Israeli police have recommended charges be laid against Prime Minister Benjamin Netanyahu after investigating hundreds of thousands of dollars in gifts he allegedly accepted from billionaires including James Packer.

Mr Netanyahu should be indicted for bribery and breach of trust, police said on Wednesday.

The decision on whether to proceed with the indictment now rests with  Attorney-General Avihai Mendelblit, and the Prime Minister’s fate may not be decided for several months.

Mr Netanyahu has rejected the bribery allegations linked to $US71,000 ($90,000) worth of gifts he received from Mr Packer and another $US214,000 ($272,000) worth of gifts from Israeli billionaire and Hollywood producer Arnon Milchan.

Police say the luxury gifts include expensive cigars, jewellery and champagne in huge quantities.

“I feel a deep obligation to continue to lead Israel in a way that will ensure our future,” Mr Netanyahu in a televised address shortly after the police recommendations were made public.

“You know I do everything with only one thing in mind – the good of the country,” he said.

“Not for cigars from a friend, not for media coverage, not for anything. Only for the good of the state. Nothing has made me deviate, or will make me deviate, from this sacred mission.”

Mr Packer struck up a close friendship with Mr Netanyahu in 2014 after the pair were introduced by their mutual friend Mr Milchin, who is one of Israeli’s richest men and produced Hollywood hits including LA Confidential and 12 Years A Slave.

The Australian billionaire later bought a waterfront home next door to the Israeli Prime Minister’s private residence in Caesarea, a town on Israel’s Mediterranean coast, and was a special guest at speeches delivered by Mr Netanyahu to the US Congress and United Nations General Assembly in 2015.

Israeli police spent months trying to interview Mr Packer as they worked on their investigation. Australian Federal Police eventually questioned the casino mogul in Melbourne last December.

There are no allegations of any wrongdoing by Mr Packer, who attended the interview voluntarily.

Part of the police investigation focused on whether Mr Netanyahu tried to help Mr Packer gain residency in Israel.

James Packer bought a home next to Netanyahu’s: Photo: AAP

Interior Minister Aryeh Deri previously confirmed Mr Packer’s lawyer had asked him about the possibility of obtaining citizenship or residency in Israel, even though he is not Jewish.

In a statement, Israeli police said Mr Netanyahu had helped Mr Milchan with US visa matters, by legislating a tax break and connecting him with an Indian businessman.

While Mr Netanyahu and his family have not denied accepting gifts, they insist they were not bribes.

Mr Milchan told police the gifts were handed over in response to “demands” from the Netanyahus, according to reports in Israeli media.

Mr Packer reportedly corroborated Mr Milchan’s statement during his interview with AFP officers, saying he was asked by Mr Milchan to give gifts to the Netanyahus.

Mr Packer told investigators he admired Mr Netanyahu and was “happy to give him presents, many times at his request and his wife Sarah’s request”, Israeli broadcaster Channel 10 reported.

Mr Netanyahu later told police in response to Mr Packer’s testimony they were neighbours and that “now and again I asked him to bring me something to Israel from abroad”.

“Certainly not in the systematic and planned way that is being put to me,” Channel 10 reported Mr Netanyahu as telling investigators.

During his first state visit to Australia in February 2017, Mr Netanyahu insisted nothing would come of the police investigation into his ties with Mr Packer as there was “nothing there, except friendship”.

“No, I’m not worried at all. Not at all,” he told reporters in Sydney.

-With AAP