An Israeli soldier was killed as three gunmen infiltrated the self-proclaimed Jewish state from Egypt's Sinai Peninsula on Friday, an Egyptian security official told AFP.

"According to our information, an Israeli soldier was killed," he said, in the attack in which the Israeli military said all three assailants also died.

One of three assailants who crossed from Egypt's Sinai Peninsula to attack Israeli soldiers on Friday blew himself up, the security official added.

"Three gunmen infiltrated Israeli territory from central Sinai. Two were killed by the Israeli army, the third detonated the explosives vest he was wearing," the source said.

The three had sneaked across the Egyptian border and ambushed Israeli troops, who managed to avert "a very big terror attack," an Israeli military spokeswoman told AFP earlier.

"[The gunmen] opened fire toward IDF (Israel Defence Force) troops that were guarding the workers (building the fence) in that area. Another force that was nearby... rushed to the area and targeted those three terrorists," said spokeswoman Lieutenant Colonel Avital Leibovich, saying all three were killed.

An Israeli radio report stated that the exchange broke out near Har Harif, an area some 20 kilometres (12 miles) southwest of the southern Israeli desert town of Mitzpe Ramon.

According to reports by Egypt's state news agency MENA, the clashes took place at the Karam Abu-Salim (Kerem Shalom) border crossing between Egypt, Gaza and Israel.