Israel has asked David Trimble to oversee an investigation into its commando raid on an aid flotilla to Gaza two weeks ago.
Nine Turkish activists died during the raid on the ships which were attempting to break an Israeli blockade on Gaza.
An independent public commission is to include two foreign observers - Lord Trimble and a retired Canadian general, Ken Watkin.
Lord Trimble said he had not yet received confirmation about the post.
It is believed it still has to be ratified by the Israeli parliament.
UK Foreign Secretary William Hague welcomed the move by Israel.
"The announcement of the inquiry last night by Israel is an important step forward.
"We welcome the involvement in that inquiry of Lord Trimble."
It was also backed by Chris Gunness, who works for the UN Relief Works Agency.
"Of course we welcome the fact that people of the stature of David Trimble will be involved in this," he said.
"We look forward to exactly what the Security Council - indeed the international community - unanimously asked for, which is a prompt, impartial investigation that meets international standards."
However, Sinn Fein's Caral Ni Chuilin questioned Lord Trimble's impartiality.
"I have to question the intention of the Israeli government in appointing David Trimble on the panel," she said.
"Many will question just how serious or impartial an investigation Israel has initiated when at this early stage they send a very clear message to the world that only those supportive of Israel will be in a position to investigate what was a criminal act of international piracy."
The BBC 's Ireland correspondent Mark Simpson said it was a sign of changed times that diplomats were being exported from Northern Ireland rather than being sent there.
"He's (Mr Trimble) been there. He's been on the conflict resolution circuits - some pretty high profile conferences," he said.
"He's obviously regarded as an international statesman having got the Nobel Peace Price in 1998 after the Good Friday Agreement.
"But in terms of pure diplomacy he doesn't really have an international track record.
"I suppose there will be some people, given unionists' historical link or reputation as friends of Israel, who will say that he isn't totally neutral.
"One would assume that if David Trimble's name has got this far it's been approved by the Americans, maybe as far up as Barack Obama."