Israel on Thursday gave Cairo its approval to deploy helicopter gunships in the neighbouring Sinai peninsula, where Egypt's military has vowed to crush Islamic militants, an Israeli official said.
The official, speaking on condition of anonymity, told AFP 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.
Israel handed over to Egypt six "completely charred" bodies that were in the armoured personnel carrier driven into the country before being destroyed, an Egyptian medical official said.