Egyptian security sources said they would not object to the barrier
Israel's government has approved plans for the construction of a barrier along its border with Egypt in a bid to keep out illegal migrants and militants.
It will be built along two parts of the border - near the Red Sea city of Eilat and on the edge of the Gaza Strip.
PM Benjamin Netanyahu said the decision was taken to secure Israel's Jewish and democratic character, but that refugees would still be allowed to seek entry.
In recent years, thousands of migrants have crossed into Israel via Egypt.
At least 17 migrants, mostly African, have been killed since May by Egyptian police, who say they are trying to stop people trafficking.
According to Israeli police estimates between 100-200 illegal immigrants cross into Israel from Egypt every week.
Eritrea is the most common country of origin for people trying to cross illegally from Egypt to Israel, followed by Ethiopia and Sudan.
On Sunday, Mr Netanyahu said he had approved the construction of sections of barrier that would block the main infiltration routes along the 266 km (166-mile) frontier, and the installation of advanced surveillance equipment.
To cover 112km (70 miles) of the 266km (166 mile) frontier
100-200 illegal immigrants cross each week
17 migrants killed by Egyptian police since May
Estimated $270m to build
The project is set to cost $270m and take several years to complete.
"I took the decision to close Israel's southern border to infiltrators and terrorists. This is a strategic decision to secure Israel's Jewish and democratic character," the prime ministers said in a statement.
Mr Netanyahu said Israel would "remain open to refugees" from conflict zones, but added: "We cannot let tens of thousands of illegal workers infiltrate into Israel through the southern border and inundate our country with illegal aliens."
Egyptian officials said Israel had not informed them of its plans, but that they would not object so long as the barrier was built on Israeli soil.
"It is an Israeli affair," foreign ministry spokesman Hossam Zaki is quoted as saying by the AFP news agency.
Israel has also been building a controversial barrier in and around the occupied West Bank in recent years. It says it is needed to defend Israeli citizens from attacks by militants. Palestinians, however, consider it a land grab.
In 2004, the International Court of Justice in The Hague issued an advisory ruling that the barrier was illegal and should be removed.
Egypt is meanwhile building an underground barrier along its border with Gaza to stem the smuggling of weapons through tunnels.