Bereaved families suing Bank of China over allegedly abetting Palestinian militants are seeking a deposition from a former top Israeli security official, their lawyer said Thursday.

The move to obtain testimony from ex-National Security Advisor Yaakov Amidror is the latest twist in a complex billion-dollar civil lawsuit launched in a New York court in October 2012 by the Israeli families of eight teenagers shot dead by a Hamas gunman at a Jerusalem seminary in 2008.

The families claim the Bank of China "facilitated" the attack and dozens of others by allowing wire transfers to the tune of millions of dollars to the Palestinian Islamist movement Hamas, via its New York City branch in violation of US law.

The Bank of China has denied the allegation.

A key aspect of the families' case was expected to be the testimony of former Israeli intelligence agent, Uzi Shaya.

But the case took an unexpected turn earlier this month when the Israeli government filed a motion to block Shaya from testifying, saying it would "harm Israel's national security."

Shurat HaDin, the Israeli group representing the families, has accused the government of Prime Minister Benjamin Netanyahu of caving into pressure from Beijing to protect lucrative trade ties.

In a countermove, Shurat HaDin has asked to cross-examine Yaakov Amidror, who stepped down as Israel's National Security Advisor earlier this month and whose name was on the affidavit accompanying the government's motion.

"We have sent a notice of deposition to Yaakov Amidror to appear before a hearing on December 10," said Shurat HaDin director Nitsana Darshan-Leitner.

"We have a right to cross-examine him," she told AFP.

"We want to understand why the issue (of Shaya testifying) suddenly became a 'national security issue' after Netanyahu's visit to China."

"Once Israel admits that the reason it is prohibiting the testimony is pressure from the Chinese, it would be a clear case of obstruction of justice and destroying evidence by the Bank of China," she said.

Between 2005 and 2007, a group of Israeli officials, including Shaya, tried to negotiate with the bank in a bid to convince them to shut down all accounts used for transferring funds to Hamas and its smaller Islamist rival, Islamic Jihad.

The bank eventually closed the accounts in 2009.

In July, Israeli press reports said Netanyahu had bowed to Chinese pressure over the matter, saying Beijing had only approved his state visit in May on condition he act to prevent the agent from testifying.

The court has not yet ruled on the Israeli government motion to bar Shaya's testimony, with the next hearing set for January 15, Darshan-Leitner said.

Contacted by AFP, Amidror refused to comment, while Netanyahu's office issued a statement saying that allowing Shaya to testify would compromise Israel's security and infringe upon its "sovereign immunity".

"On behalf of the citizens of the State of Israel, we stand with victims of terror and their families and sympathise with their profound agony and pain," read the statement.