Germany has delayed signing a deal with Israel advancing the sale of three submarines, an Israeli official said Tuesday as a corruption probe into the affair gained momentum.

Germany and Israel were set to sign a memorandum of understanding over the sale in Berlin next week, Israeli media reported.

A source in Israel's National Security Council said on condition of anonymity Tuesday that "Germany has put off the MOU signing for the time being," without providing further details.

That followed the arrest of several people in recent days on suspicion of offences including bribery and money laundering around the deal to buy the Dolphin submarines from German industrial giant ThyssenKrupp.

One of the main suspects is reportedly close to becoming a state witness.

Those detained include former navy commander Eliezer Marom, former deputy head of Israel's National Security Council Avriel Bar Yosef and the local representative for ThyssenKrupp, Miki Ganor.

David Shimron, a relative of Prime Minister Benjamin Netanyahu and his family lawyer who also represents ThyssenKrupp in Israel, was taken for questioning but later released.

On Monday, Israeli media reported that Ganor, who along with Bar Yosef is still in custody, was close to becoming a state witness.

Daily newspaper Yediot Aharonot, which first reported that the MOU signing had been delayed, said Germany had added a clause allowing it to back out of the deal if it was found to have been reached through corruption.

Israeli officials said Germany had not backed out of the deal but was waiting to see the outcome of the investigation, Yediot Aharonot reported.

German officials had no immediate comment.

In February, Israel's justice ministry said it had launched an investigation into the affair, stressing that Netanyahu himself was not a suspect in the case.

Netanyahu is being investigated separately, reportedly over allegations he and his wife accepted improper gifts from Israeli businessman and Hollywood producer Arnon Milchan.

The Israeli premier is also being investigated over suspicions he sought a secret deal with Amnon Moses, publisher of Israel's top-selling newspaper Yediot Aharonot.

Netanyahu has rejected allegations of misconduct, saying he is the target of a campaign by political opponents.

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