Israel on Sunday froze shipments of building materials to the Gaza Strip after discovering an alleged "terror tunnel" into the Jewish state from the adjoining territory, a defence official said.

"Due to security reasons, (the army) decided to stop for now the transfer of building materials into Gaza," Guy Inbar told AFP.

Inbar, spokesman for the Israeli defence ministry unit responsible for civilian affairs in the Palestinian territories, did not say how long the ban would remain in force.

Last month Israel permitted delivery of cement and steel for use by the private sector into the Gaza Strip for the first time since 2007, when Israel banned their transfer fearing that Gaza's militant Hamas rulers would use construction materials to fortify its positions and build tunnels for militant attacks on the Jewish state.

Israeli officials said on Sunday that a sophisticated tunnel running 450 metres (yards) into Israel and intended as a springboard for militant attacks had been uncovered by troops.

"I want to congratulate the army for exposing the Gaza terror tunnel," Prime Minister Benjamin Netanyahu told the weekly cabinet meeting on Sunday. "It is part of our offensive policy against terror, both in prevention and intelligence, proactive activity, reactive activity."

The army did not immediately publish details of the tunnel, but the head of the Israeli local council where it was found said that he had been taken inside for an inspection.

"This tunnel, which looks like the New York subway, is apparently intended to kidnap soldiers or for some other kind of terrorist attack," Haim Yelin told army radio.

"It is impressively executed, with concrete supports."

Israeli news website Ynet said that the tunnel was equipped with railway tracks and lighting, and quoted chief military spokesman Yoav Mordechai as calling it "one of the most advanced terror tunnels to be uncovered in recent years."

Yelin denied media reports that the tunnel was aimed at attacking an Israeli village or kibbutz or that it was to be used to set off explosives under a kindergarten.

"This tunnel penetrates into the state of Israel 300-400 metres (yards) from the border with the Gaza Strip," he said.

"It is situated 2.5 kilometres (1.5 miles) from any of the kibbutzim and moshavim (collective villages) in the area."