Masked gunmen killed 16 Egyptian soldiers Sunday at a checkpoint along the border with Gaza and Israel, the first such attack on troops — and then the attackers drove off, crashing into Israel, officials said.

Egypt blamed Islamist militants from Gaza and Egypt's troubled Sinai Peninsula. President Mohammed Morsi said the attackers "will pay dearly."

The Rafah crossing is on the border between the Gaza Strip and the Israeli-Egyptian frontier. (Google)

The Israeli military said the attack was part of a plot to abduct an Israeli soldier, and two vehicles commandeered by the attackers crashed into Israel, where one blew up.

In a statement, Israel's Defense Minister Ehud Barak said "the militants' attack methods again raise the need for determined Egyptian action to enforce security and prevent terror in the Sinai."

The attack took place around sunset in the Egyptian border town of Rafah, when the troops were having the traditional meal at the end of the daily fast during the Islamic holy month of Ramadan.

Egyptian state TV said the attack on the checkpoint was carried out by Islamist militants. The report said that 16 troops were killed in the attack and alleged that it was co-ordinated between Palestinians who entered Egypt from Gaza and Egyptians in Sinai.

Emergency services official Ahmed el-Ansari told Egypt's news agency that seven were wounded by gunfire.

President Morsi convened an emergency meeting with military and security leaders following the attack. In a statement from the president's office, Morsi offered his condolences to the families of the dead and said the "cowardly" attack will not go "without a response."

"Those who carried out this crime will pay dearly," Morsi's statement said.

In a statement late Sunday, Morsi's Muslim Brotherhood urged Egyptian authorities to take all necessary measures to "confront this serious challenge to the Egyptian sovereignty and to protect Sinai from all armed groups."

Growing Sinai lawlessness

It was one of the bloodiest attacks in Sinai in years and the deadliest against Egyptian troops, underlining the growing lawlessness of the Egyptian territory, where security forces have become targets of militants, some loosely linked with al-Qaeda.

Israeli military spokeswoman Lt.-Col. Avital Leibovich said one vehicle exploded, and Israeli aircraft struck the second one. Israeli government spokesman Ofir Gendelman said on his Twitter account that seven militants were killed, four on the Israeli side and three in Egypt.

Leibovich said Israeli soldiers were combing the area for other militants who might still be on the Israeli side of the border. The military instructed Israeli civilians to stay inside their homes.

An Egyptian military official said Egyptian troops were pursuing the militants who returned to Egypt. He said the attackers used three vehicles.

An Egyptian border official said the Rafah terminal between Egypt and Gaza has been closed indefinitely. It is the only crossing from Gaza that is not under direct Israeli control.

A former Egyptian intelligence officer close to the military, Sameh Seif el-Yazel, told state TV the attack began at another checkpoint inside Rafah, where the militants took the armoured vehicles and headed toward the border checkpoint. He said the militants drove about 25 metres into Israel before Israeli troops attacked them. Some fled back into Egypt, he said.

Egyptian and Israeli officials have been warning of a deteriorating security situation in Sinai, where militants have taken advantage of a security vacuum in the area following the uprising that toppled longtime Egyptian president Hosni Mubarak last year.

All the Egyptian officials spoke on condition of anonymity because they were not authorized to speak to reporters.

In a statement posted on the website of Gaza's Hamas leaders, Hamas condemned "the ugly crime committed today against the Egyptian soldiers, and sent its condolences to the families of the victims, to Egypt's president and to his government." Hamas did not fix blame for the attack.