Three Israeli soldiers and an Egyptian security officer have been killed near the countries' border, Israel and Egypt said, in an incident whose details remained unclear but which the countries said they were investigating jointly.

The Israeli military said an Egyptian policeman shot and killed two of its soldiers while they secured a military post at the Egyptian border early on Saturday, after forces successfully thwarted a large smuggling attempt overnight.

It said the Egyptian officer and a third Israeli soldier were killed hours later in a confrontation inside Israeli territory.

As soon as the two Israeli soldiers were discovered dead, the military treated the incident as a terrorist attack, said Eliezer Toledano, the Israeli military's Southern Command chief.

Egypt's military said the three Israeli and one Egyptian security personnel had been killed in an exchange of fire as the Egyptian security officer chased smugglers across the frontier.

Egyptian and Israeli officials are probing the circumstances of the incident in full cooperation, the Israeli military and two Egyptian security sources said.

Egypt in 1979 became the first Arab country to sign a peace treaty with Israel and the more than 200km long border has largely remained calm.

The Israeli military spokesperson said that while drug smuggling attempts in the area were frequent, the last known infiltration into Israel that resulted in casualties happened some 10 years ago.