The inner cabinet, which is made up of senior members, on Monday also directed the Foreign Ministry to continue its diplomatic efforts to stop the flotilla from setting sail. The flotilla of about 10 ships is scheduled to leave from ports as early as Tuesday and meet in the Mediterranean Sea before continuing on to Gaza.
The decisions come a day after Israeli Prime Minister Benjamin Netanyahu at a meeting of the entire Cabinet said he would not allow the flotilla ships to breach Israel's maritime blockade of Gaza.
Meanwhile, Israel's Navy has prepared for various scenarios should its commandos be required to board any of the flotilla ships, as they did in May 2010. The ensuing violence aboard the Turkish ship Mavi Marmara that year resulted in the deaths of nine flotilla participants.
Israel has said it will take any humanitarian aid directly to Gaza if the flotilla ships are brought into an Israeli port. Israel also has secured an agreement from Egypt's interim government to allow the flotilla ships to unload their aid in the El Arish port and take it into Gaza.
Also Monday, Netanyahu instructed the "responsible authorities to formulate a special procedure regarding foreign journalists that participate in the flotilla and arrive in contravention of the Entry into Israel Law," according to a statement issued from his office.
Members of the Israeli media and international journalists will be embedded in Israeli Navy vessels "in order to create transparency and credible coverage of the events," the announcement said.
The head of Israel's Government Press Office threatened to ban foreign reporters from the country for 10 years in a letter sent Sunday to Israel-based foreign journalists.
Along with threatening the ban, Orel Helman wrote, "I implore you to avoid taking part in this provocative and dangerous event, the purpose of which is to undermine Israel's right to defend itself and to knowingly violate Israeli law."