Israeli forces have killed three Egyptian border police after mistaking them for Palestinian militants trying to cross into the Gaza Strip.
The three died after a tank opened fire on "suspect silhouettes", Israeli army radio says.
The southern Gaza Strip is the scene of frequent clashes between Israeli troops and Palestinian fighters.
Israeli Prime Minister Ariel Sharon has apologised to President Hosni Mubarak, Egypt's Mena news agency says.
Earlier, Israeli Deputy Defence Minister Zeev Boim said he regretted what he called a "grave incident".
The BBC's Alan Johnston in Gaza says there has been continual friction on the Gaza-Egyptian border between Israeli troops and Palestinian militants trying to smuggle in weapons.
The Israelis have often been accused of firing indiscriminately in the area, our correspondent adds.
Israel keeps a close eye on the Gaza-Egypt border
The shooting occurred in an area marked as "the Philadelphi road" on Israeli military maps - a narrow strip of land on the southern edge of the Gaza Strip.
Israel has long argued it will need to hold on to the area, even if the planned disengagement from Gaza goes ahead.
However last month an aide to Mr Sharon told the BBC Israel would pull out of the Philadelphi strip as well if a security understanding could be reached with Egypt.
The Israeli army has not commented on Thursday's incident so far. An investigation has been launched.
Egypt and Israel have been at peace since 1979