Rafah is Gaza's main gateway to the outside world
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Israel's security cabinet has approved a deal with Egypt that will allow a key border crossing to the Gaza Strip to be re-opened.
Israeli Defence Minister Shaul Mofaz had agreed to open the border after talks with Egyptian President Hosni Mubarak in Cairo last Wednesday.
People will be able to use the crossing at Rafah, while goods will move through a terminal at Kerem Shalom.
Meanwhile, Egyptian guards shot two Egyptian smugglers on the border.
The proposal agreed by the security cabinet on Tuesday will allow international inspectors to be deployed at Rafah, in addition to Egyptian and Palestinian officials.
Israeli surveillance cameras will also be installed to allow the crossing to be monitored.
The precise details of the agreement have yet to be finalised with the Palestinian government, the officials said.
The deal will also have to be approved by the full Israeli cabinet later this week.
Mr Mofaz said on Wednesday that the new agreement should come into effect in a month's time.
Israel closed the Rafah crossing after withdrawing from Gaza in September.
'Essential' crossing
Israel has been criticised by the international community for delaying the re-opening of the border.
International envoy James Wolfensohn said last month in a letter to UN Secretary General Kofi Annan that Israel was reluctant to loosen its control over the Gaza Strip.
He said Israel was "almost acting as though there had been no withdrawal".
Mr Wolfensohn also said there needed to be quick progress on improving Palestinian movement and access to the outside world if the economic revival essential to peace was to happen.
Israel said it had to address security fears before easing access to Gaza.
It is also concerned about the crossing point being used to smuggle contraband goods from Egypt into Palestinian territory.
Egyptian smugglers shot
Two Egyptians were shot while trying to smuggle such goods into Gaza only hours after the Rafah deal was approved.
Salim Hassan Muslih and Salman Eid Salim ignored warnings when Egyptian border guards saw them trying to climb the border fence at al-Kuntilla, 55km (35 miles) north of the Egyptian town of Taba.
They were shot after they dropped their bags of cigarettes and tried to escape.