Israel is beefing up defenses in the south following intelligence that a number of Palestinian terror groups are operating from within Sinai.

Israel Defense Forces Chief of Staff Benny Gantz ordered the reinforcement of forces all along the border, from the Gaza Strip to the Gulf of Eilat, on Sunday night, following concrete intelligence that a number of cells of militants had entered Sinai through tunnels in Rafah, aiming to carry out attacks on Israeli territory.

The terrorists who identify themselves with the Palestinian Islamic Jihad and the Popular Resistance Committees are cooperating with Egyptian Islamists and are planning to carry attacks to avenge the killing of their members during Israeli air strikes in the Gaza Strip over the past two weeks.

The intelligence warnings affect various points along the border and include different type of attacks, including penetration of the border and attacks against Israeli vehicles traveling on highways running close to the border.

An attack earlier this month left eight Israelis dead and dozens wounded after terrorists who had tunneled from Gaza into Egypt attacked buses and cars traveling near the border north of Eilat. Defense sources fear a repeat attack.

Another possible scenario is the launching of rockets against Eilat and other Israeli communities from Sinai.

Despite the warnings, the resort town of Eilat does not appear to be showing any signs of stress. Hotels in the city have not registered any losses and some 5,000 visitors are in town for a Mizrahi song festival.

The presence of security and military forces in the city is noticeable but a military source said that the real military presence is felt along the border with Egypt.

"One should remember that the length of the border is 200 kilometers and that the larger concentration of forces is found northwest of Eilat," the source said.

In addition to the additional troops deployed along the border, the IDF has also positioned in place various electronic and other intelligence gathering resources.

Communities near the Egyptian border have received bolstered security, while Routes 10 and 12, which run along the border, have been closed.

The army is also preparing for any possible sea-borne attack on Eilat with naval reinforcements along the gulf, including anchoring Israel's two most advanced missile boats in the port of Eilat.

The two missile boats may also be in the area in anticipation of Iranian naval vessels making their way from the Persian Gulf to the Red Sea, as was reported yesterday in Tehran.

Calm was kept yesterday all along the border with the Gaza Strip and no rockets or mortars were fired at Israel.

Senior Israeli officials have been leaking intelligence on what is known about the terrorists's plans, both publicly and off the record.

During a visit to an Elbit plant in Sderot, Minister Matan Vilnai made reference to the Ramadan ending-holiday yesterday and said "the Islamic Jihad has been trying for a long time to carry out attacks from Sinai and Id al-Fitr is a good time for them to do so. The defense establishment has intelligence about a plans for an attack by a cell of more than 10 militants. The defense establishment and the IDF are in full readiness in cooperation with Egypt in order to foil these attempts."

Talks have also been held in recent days at the Defense Ministry on how to expedite the procurement of Iron Dome missile defense batteries in order to protect the south against rockets. Discussions are also focused on the construction of a border fence with Egypt, which according to the current plan is due to be completed in the end of 2012.

Rafael, the main contractor in the Iron Dome project, and ELTA, which produces the system's radar of the system, have changed their production priorities in order to provide the air force with a third Iron Dome battery in two weeks and a fourth by year's end.