Egypt is considering setting up a buffer zone on its border with the Gaza Strip following recent bloodshed, the independent newspaper Al Masry Al Youm reported Sunday.

The plan includes removing smuggling tunnels running across the 14-kilometer-long border with Gaza.

Security agencies are poised to start demolishing the tunnels used in smuggling arms and goods, said the report - citing heavy digging equipment spotted for removing the tunnels.

Five Egyptian policemen were killed by Israel on August 19 during a hunt for militants near the border with Egypt who committed a multi-staged attack in southern Israel, which left eight dead.

The deaths have triggered outrage in Egypt, causing the worst crisis between the two countries since they signed a peace treaty in 1979.

The Egyptian army and security troops have recently launched a campaign in the Sinai Peninsula to restore central government control and track down those behind attacks on police stations, as well as on pipeline transporting gas to Israel.

Meanwhile, Prime Minister Benjamin Netanyahu said Sunday that he does not believe Israel should rush to amend the peace treaty with Israel.

"If we are going to alter the peace treaty with Egypt – and I don't think that it is something we need to rush into – it must be approved by the cabinet," Netanyahu said Sunday during a meeting with Likud ministers.

Recently, senior Israel Defense Forces officials said that Israel should consider amending its peace treaty with Egypt so as to allow the Egyptian Army to increase its presence in Sinai in light of the deteriorating security situation there.

Netanyahu, however, stressed that Israel must first take care of its security issues and also examine more closely the situation in Sinai.

"We must take care of security, terror problems in particular, and we need to invest more resources in tackling obstacles," Netanyahu pressed. "We are in continued contacts with the Egyptian government and we are trying to navigate these contacts intelligently."

On Saturday, Defense Minister Ehud Barak said that Israel does not intend to approve additional Egyptian troops in the eastern Sinai Peninsula, despite reports in Haaretz and the British weekly The Economist on Friday in which the defense minister said it was in Israel's interest to allow Egypt to bring in larger forces to overcome the ongoing anarchy along the border with Israel.