Initial tests showed that bird flu was responsible but tests were continuing to determine whether it was the H5N1 strain that is potentially deadly to humans.
"We have found hundreds of dead poultry and other sick birds on a kibbutz in the south of Israel, which makes us worried about the appearance of the bird flu virus," said an agriculture ministry official.
"The initial tests indicated it was bird flu although these were not the final results and everything is still being tested in the laboratories", another official said.
Hundreds of dead poultry were found at the Ein Hashlosha kibbutz in the Negev desert east of the Gaza border and dozens more in nearby communities, prompting the agriculture ministry to seal off the area.
Israel imposed a ban on all meat imports from the Gaza Strip on February 17 following the discovery of the deadly H5N1 strain of the bird flu virus in Egypt.
More cases detected
The H5N1 strain has killed or forced the slaughter of tens of millions of chickens and ducks across Asia since 2003, and recently spread to the Middle East, Africa and Europe.
Denmark has detected its first case of the deadly strain of H5N1 bird flu, in a wild buzzard that was found dead earlier this week.
The buzzard was found on Sunday on a beach at Svinoe, on the island of Zealand, south of Copenhagen. Veterinary and Food Administration have implemented a protection and security zone on southwestern Zealand.
Afghanistan, Myanmar, Malaysia have also confirmed their first outbreaks of the deadly strain of bird flu while Azerbaijan tested a dead dog to see if the virulent variant had jumped to yet another species.
In the first suspected case of the virus in Britain, the EU reference laboratory was testing several chickens found dead at a farm on the Orkney Islands off the northern coast of Scotland.
The United Nations and the Afghan government confirmed the deadly strain in samples from Kabul and the eastern city of Jalalabad, the country's first outbreaks. Afghanistan ordered the immediate slaughter of all birds in affected areas.
Pakistan was also taking "protective measures" against the strain as it awaited confirmation from the EU laboratory on an outbreak at two chicken farms on the Afghan border, which it said was highly likely to be H5N1.
Azerbaijan was testing for bird flu in the bodies of three women found dead earlier this week and a dog found on the outskirts of the capital Baku.
The health ministry ordered the eradication of all domestic birds within a three-kilometer radius of any outbreak of avian influenza, but the order was widely ignored.
Officials in Ethiopia said initial test results on samples from domestic fowl that died last month tested negative for the H5N1.
Farmers in the Netherlands received official clearance to start vaccinating poultry against bird flu until the end of June, the agriculture ministry said, following a similar program in France.
Unlike France, the Netherlands has not yet detected any cases of bird flu.