Israeli officials have confirmed that thousands of turkeys and chickens found dead in the south of the country had the H5N1 strain of the bird flu virus.
Around 11,000 birds have died in Israel's first outbreak of the virus
Tests were ordered after the dead poultry were discovered on two farms in Ein Hashlosha and Holit, next to the Gaza Strip in the western Negev desert.
Several people have been admitted to hospital with flu-like symptoms.
A quarantine has been imposed around the area and thousands of birds are expected to be culled over coming days.
On Thursday, Israeli Agriculture Minister Zeev Boim said the authorities were prepared to contain the virus' spread if an outbreak was confirmed.
Speaking to reporters a day after the dead poultry were found, the director of veterinary services at the agriculture ministry confirmed the H5N1 strain had been detected.
Moshe Haimovitch said around 11,000 birds had died at the two farms in Israel's first outbreak of the virus.
Mr Haimovitch said officials were preparing to kill a further 300,000 birds inside the 7km (four-mile) quarantine zone around the two communities over the coming days.
Up to five people who came into contact with the infected birds at Kibbutz Ein Hashlosha and Kibbutz Holit have been admitted to a hospital in the southern city of Beersheva with flu-like symptoms.
A kibbutz between Jerusalem and Tel Aviv has also been sealed off after more birds were found dead.
The source of the outbreak has not been determined, but the Israeli army is reported to have asked the Palestinian Authority to deliver blood samples from poultry in Gaza.
Both Israel and the Gaza Strip share a border with Egypt, where the virus has been found in birds in at least 15 governorates.
The BBC's Caroline Hawley in Jerusalem says it is not clear what the response to the Israeli request has been at a time of increased tension between Israelis and Palestinians after the storming of a jail in Jericho and the capture of a leading Palestinian militant earlier this week.
But Israeli officials say they are testing dead poultry in the West Bank and Gaza in a rare show of co-operation with the Palestinians.
The H5N1 strain of the virus has killed more than 70 people worldwide.
It does not pose a large-scale threat to humans, as it cannot pass easily from one person to another.
However, experts fear the virus could mutate to gain this ability, and in its new form trigger a flu pandemic, potentially putting millions of human lives at risk.