Israel's far-right Foreign Minister Avigdor Lieberman has warned Prime Minister Binyamin Netanyahu that Egypt presents a larger security threat to the Zionist state than Iran.

Lieberman reportedly told Netanyahu that political changes in Egypt since the 2011 uprising that toppled close Israel ally Hosni Mubarak and Egyptian army activity in the Sinai Peninsula pose a greater threat to the country than Iran, according to the Hebrew daily Ma'ariv newspaper.

Lieberman advised Netanyahu to send additional troops to southern Israel in response to political changes taking place in Egypt.

“We have to be prepared for all possibilities,” Lieberman warned Netanyahu, and suggested Israel form three or four southern divisions in response to the social and economic problems taking place in Egypt and the increasing number of Egyptian troops in the Sinai Peninsula.

Lieberman claimed the new Egyptian government would search for a "foreign enemy" to unite the people and that Israel was the most likely candidate.

"The seven battalions Egypt has deployed in Sinai to regain control of the peninsula and fight armed cells, aren’t carrying out real antiterrorism activities," Maariv quoted Lieberman as saying.

Lieberman also noted that Egypt might violate the Camp David peace treaty between the two countries.

Ma'ariv noted that Lieberman had frequently raised developments in Egypt at security and closed-door meetings, but had now raised the issue in a more formal way via a special document to the prime minister.