Israeli police have arrested seven people this week over an alleged corruption scandal involving a submarine deal with Germany which reportedly involves people close to Prime Minister Benjamin Netanyahu.

"As part of the ongoing investigation being carried out by the national crimes and investigation unit this morning another suspect was arrested and is being questioned," police spokesman Micky Rosenfeld said on Tuesday.

Tuesday's arrest comes a day after six other Israelis were taken in for questioning on suspicion of offences including bribery and money laundering over a deal to buy Dolphin submarines from Germany's ThyssenKrupp.

Three were released to home arrest, while three others were remanded.

Police named the three remanded as Avriel Bar Yosef, former deputy head of Israel's National Security Council; Micky Ganor, the local representative for ThyssenKrupp; and Ronen Shemer, a lawyer employed by Ganor.

Media reports have alleged a conflict of interest over the role played by David Shimron, a relative of the prime minister and the Netanyahu family lawyer who also represents ThyssenKrupp in Israel.

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

Netanyahu is being investigated in a separate case over corruption suspicions reportedly involving receiving gifts from Israeli businessman and Hollywood producer Arnon Milchan.

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

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

Source: AFP