Israel on Thursday gave Cairo its approval to deploy helicopter gunships in the neighboring Sinai peninsula, where Egypt's military has vowed to crush Islamic militants, an Israeli official said.
The official, on condition of anonymity, told AFP news agency that Israel's 14-member security cabinet had agreed to a temporary easing of the terms of a 1979 peace treaty which limits Egypt's military deployment in the Sinai.
The decision came a day after the Egyptian military said it had already deployed attack helicopters in raids that killed 20 militants in the territory.
The operation was launched after gunmen on Sunday killed 16 Egyptian guards near the border and tried to storm southern Israel.
They raided a border guard base under the cover of mortar fire and commandeered a military vehicle into the Jewish state before they were halted by an Israeli helicopter strike.
In the Gaza Strip, where Egypt closed its Rafah border crossing after the attack, the Hamas interior ministry said Palestinians returning from Egypt would be allowed passage from Friday.
Earlier on Thursday, Egyptian police and gunmen traded fire in the Sinai town of al-Arish as security forces pressed an unprecedented campaign to quell Islamist militants, state television reported.
“Clashes resumed between armed men and police forces in front of police station number two in al-Arish,” Nile News television reported, citing its correspondent there.
Egypt’s President Mohammed Mursi sacked his spy chief and two generals on Wednesday after a deadly ambush on soldiers prompted the military to launch unprecedented air strikes on militants in the Sinai.
Security officials say it is the first time that the army has fired missiles in Sinai since Egypt’s 1973 war with Israel, which was an attempt to recapture the Sinai Peninsula.
The government appeared set on regaining control of Sinai, where 16 soldiers were killed in a militant ambush on the weekend which exposed Egypt's weak grip on the lawless peninsula despite a bolstered military presence since last year.
The changes in the military and intelligence ranks came as the army declared tentative victory against the Islamist militants on Wednesday, hours after state television reported the 20 militants killed in air strikes.