At least nine people have been killed after Israeli commandos stormed a convoy of ships carrying aid to the Gaza Strip, the Israeli army says.
Armed forces boarded the largest vessel overnight, clashing with some of the 500 people on board.
It happened about 40 miles (64 km) out to sea, in international waters.
Israel says its soldiers were shot at and attacked with weapons; the activists say Israeli troops came on board shooting.
The activists were attempting to defy a blockade imposed by Israel after the Islamist movement Hamas took power in Gaza in 2007.
There has been widespread condemnation of the violence, with several countries summoning the Israeli ambassadors serving there.
UN chief Ban Ki-moon said he was "shocked by reports of killings and injuries" and called for a "full investigation" into what happened.
Israeli Prime Minister Benjamin Netanyahu, who is in Canada, has cancelled a scheduled visit to Washington on Tuesday to return to Israel, officials said.
Earlier, he expressed his "full backing" for the military involved in the raid, his office said.
The White House said the US "deeply regrets the loss of life and injuries sustained" in the storming of the aid ship.
A spokesman said US officials were "currently working to understand the circumstances surrounding this tragedy".
'Guns and knives'
The six-ship flotilla, carrying 10,000 tonnes of aid, left the coast of Cyprus on Sunday and had been due to arrive in Gaza on Monday. Israel had repeatedly said the boats would not be allowed to reach Gaza.
Israel says its soldiers boarded the lead ship in the early hours but were attacked with axes, knives, bars and at least two guns.
"Unfortunately this group were dead-set on confrontation," Israeli government spokesman Mark Regev told the BBC.
"Live fire was used against our forces. They initiated the violence, that's 100% clear," he said.
Organisers of the flotilla said at least 30 people were wounded in the incident. Israel says 10 of its soldiers were injured, one seriously.
A leader of Israel's Islamic Movement, Raed Salah, who was on board, was among those hurt.
Contact with activists on the ships was lost after the raids and no first-hand accounts from them have yet emerged.
Arafat Shoukri, of the Free Gaza Movement (FGM) which organised the convoy, said those on board one ship had told them by telephone that Israeli helicopters had arrived.
"Then we started to hear screams, shouting, shooting everywhere," he said. "We heard some of them shouting 'we are raising the white flag, stop shooting at us'."
He said Israeli claims that activists had pistols and other weapons were "cheap propaganda".
Audrey Bomse, also of the FGM, told the BBC that the activists were "not going to pose any violent resistance".
By midday Israel had towed three of the six boats to the port of Ashdod and says it will deport the passengers from there.
Turkish TV pictures taken on board the Turkish ship leading the flotilla appeared to show Israeli soldiers fighting to control passengers.
The footage showed a number of people, apparently injured, lying on the ground. A woman was seen holding a blood-stained stretcher.
Al-Jazeera TV reported from the same ship that Israeli navy forces had opened fire and boarded the vessel, wounding the captain.
The Al-Jazeera broadcast ended with a voice shouting in Hebrew, saying: "Everybody shut up!"
Israel's deputy Foreign Minister Danny Ayalon said his country "regrets any loss of life and did everything to avoid this outcome".
He accused the convoy of a "premeditated and outrageous provocation", describing the flotilla as an "armada of hate".
Palestinian Authority President Mahmoud Abbas condemned Israel's actions, saying it had committed a massacre, while Hamas said Israel had committed a "great crime and a huge violation of international law".
Turkey, whose nationals comprised the majority of those on board, accused Israel of "targeting innocent civilians".
Turkey was Israel's closest Muslim ally but relations have deteriorated over the past few years.
In Turkey, thousands of protesters demonstrated against Israel in Istanbul, while several countries have summoned Israeli ambassadors to seek an explanation as to what happened.
Greece has withdrawn from joint military exercises with Israel in protest at the raid on the flotilla.
Israel had repeatedly said it would stop the boats, calling the campaign a "provocation intended to delegitimise Israel".
Israel says it allows about 15,000 tonnes of humanitarian aid into Gaza every week.
But the UN says this is less than a quarter of what is needed.