Israeli soldiers shot dead two members of Islamic Jihad on the border of the Gaza Strip early Sunday, Palestinian and Israeli officials have said.

The two resistance fighters died to the east of Khan Younis, in the southern part of the Gaza Strip, during an exchange of fire with Israeli soldiers, said witnesses and the Al-Quds brigade, a militant Islamist group.

An Israeli army spokeswoman confirmed the clash.

"Soldiers opened fire on members of a terrorist cell which was trying to place an explosive charge in the immediate vicinity of the security barrier," she told AFP. The barrier separates Israel from the Gaza Strip.

"The incident happened in the south of the Gaza Strip and helicopters backed up the fire of the soldiers," she added.

She said that after a similar incident a month ago in which there were no casualties, "soldiers received instructions not to hesitate to open fire when they saw terrorists placing booby-trap devices near the barrier."

Israeli soldiers last week shot at children collecting gravel near the border. A 14 year old shepherd was shot in the head and another 3 were injured near the border in northern Gaza on December 23, Palestinian medics said.

Tension has been rising along the Gaza Strip as the Israeli military has been stepping up its incursions and attacks on the Palestinian.

Hamas, which controls the Gaza Strip, has nevertheless continued to observe its ceasefire against Israel, while warning that is ready to resume fighting if there is an Israeli attack on the territory.

The group's armed wing warned on Saturday that it was ready to repel any future Israeli invasion and hinted at a secret weapon.

"There is a truce in effect in the field. It is real if Israel stops its aggression and ends its siege. But if there is any Israeli aggression on the Gaza Strip we will respond strongly," said a masked spokesman for Hamas' Al-Qassam Brigades who identified himself as Abu Obeideh.

"We are completely ready to answer any Israeli aggression," he said, speaking at a press conference in Gaza City with three guards, who were all masked and armed.

"Our weapons are few compared to those of the Israeli occupation, but we have something that will worry the occupation," he said.