An Israeli construction worker has been shot and killed on the Egyptian border, by terrorists crossing from the Sinai peninsula.

Gunmen attacked a convoy of construction workers who were building a security fence, injuring one and killing another, who is believed to be an Israeli-Arab. Two of the terrorists were killed in the exchange of fire as Israeli soldiers arrived.

Israeli military spokesman Yoav Mordechai said three gunmen attacked the convoy, opening fire on the workers. "A terrorist squad opened gunfire and possibly also fired an anti-tank rocket at an area where [Israel] is constructing the border fence. Soldiers arrived on the scene and killed one terrorist."

Another military spokesman told AFP that "three or maybe four terrorists are still inside Israeli territory and we are currently trying to find them".

The men were working close to the border village of Kadesh Barnea. Communities in the area are on high alert, with schools and roads closed.

In August 2011, terrorists from Egypt fired on buses near Eilat, killing eight people.