Israel announced on Monday it had recovered the wreckage of the Altalena, an arms-smuggling boat whose sinking by the Israeli military just after the state's founding in 1948 exposed divisions that persist today.

The Altalena had set sail from France loaded with weapons packed for the Irgun, the militant Zionist force that conducted attacks against the British colonial authorities and the local Palestinian population in the quest to establish Israel.

In June 1948, Israeli forces opened fire and sank the boat in waters off Tel Aviv on the orders of David Ben Gurion, Israel's first prime minister. He wanted to exert his authority and prevent the emergence of any paramilitary rival to the Israeli military in the month-old state, which was in the throes of war with neighbouring Arab countries.

"At 12:30 am, at a depth of 503 metres, west of the coast of Israel, the Altalena ship was located intact –- 78 years after that painful and seminal event that shook the young State of Israel," Heritage Minister Amihai Eliyahu said.

Sixteen Irgun members and three Israeli soldiers were killed. Irgun chief Menachem Begin asked his fighters to surrender to Israeli authorities with words that would become famous: "There will be no civil war with the enemy at our gates."