Islamist gunmen have killed at least 15 Egyptian policemen and seized an army tank in an assault on a Sinai police station near the border with Israel, the deadliest attack in the region in at least two decades.
The attack on Sunday (local time), which saw Israeli aircraft destroy a vehicle used by the gunmen to try to storm the fortified border, was the first major security emergency for Egyptian President Mohamed Mursi, who summoned his military council.
Egyptian state television and Israeli military officials said an Islamist militant group was responsible for the assault.
Israel has previously accused Palestinian militants in Gaza of involvement in militant activity in Sinai, where insecurity has spread since the US-aligned Egyptian president, Hosni Mubarak, was toppled by a citizen revolt last year.
Sunday's attack will force Egypt and Israel to engage at a time when both are still in the process of recalibrating their relationship after Mursi, an Islamist, assumed office at the end of June. It may also test Egypt's relationship with Hamas, the rulers of the Gaza Strip, if it is shown that Palestinian gunmen were involved.
Israeli Prime Minister Benjamin Netanyahu said: "Thanks to the determined action of the IDF (Israel Defence Forces) and the Shin Bet (internal security agency), a big attack against Israeli civilians was prevented."
The Egyptian state news agency quoted a security official as saying the attack was carried out by militants who infiltrated from Gaza via a tunnel as well as by other militants from two regions in Egypt's Sinai peninsula.
Israeli Defence Minister Ehud Barak called for "determined Egyptian action" to "prevent terror in Sinai".
"Elements of a jihad organisation drove SUVs into one of the checkpoints south of the Rafah border," Egyptian state television said. It said 15 security forces personnel had been killed and at least 7 wounded.
It was not clear how many attackers were involved.
"There was an exchange of fire with the attackers who seized an army tank and used it to make a second attack in Rafah," the Egyptian television report said.
Israeli military spokeswoman Avital Leibovich said gunmen had seized two vehicles. One exploded and the second was destroyed by Israeli aircraft.
"As of now, we know of no terrorists still in the area. There are some Israeli communities nearby, and residents have been asked to stay in their homes."
An Egyptian security source said the Rafah border crossing with Gaza had been closed "indefinitely" after the attack.