Three Israeli soldiers were shot dead Saturday in a "security incident" on the border with Egypt, the Israeli military said, while the attacker, an Egyptian policeman, was killed by Israeli troops.

"Early in the morning, two Israeli soldiers, a man and a woman, were killed by an assailant who opened fire on them while securing a military post on the Egyptian border. Additional soldiers subsequently arrived in the area and conducted searches there," the Israeli military said in a statement.

Hours later, around noon (09.00 GMT), soldiers identified the assailant in Israeli territory and there was another exchange of fire between the assailant and Israeli troops, in which the attacker, identified as an Egyptian policeman, died.

In that second engagement, another Israeli soldier was killed and one was lightly wounded.

"The aggressor is an Egyptian policeman. An investigation is being carried out in full cooperation with the Egyptian army," a military spokesman confirmed, adding that Israeli soldiers continue to search the area to rule out the presence of additional aggressors.

"The Defense Forces express our heartfelt condolences to the families of the victims and will continue to support them," the military said in a statement.

The incident in which the first two soldiers were killed occurred near Mount Sagi in the Negev desert.

The border between Israel and Egypt is largely peaceful, however, there are frequent attempts to smuggle drugs through the separation fence, where an exchange of fire occasionally occurs between Israeli soldiers and traffickers.

The Egyptian military also frequently targets drug traffickers as well as jihadist groups in the North Sinai desert, sometimes resulting in accidental cross-border shooting.

Sinai-based jihadists carried out multiple attacks on Israel in 2011 and 2012. In an attack in August 2011, six Israeli civilians, a soldier and a counter-terrorism police officer were killed, as well as five Egyptian soldiers.

Hours before the first shooting incident on Saturday, Israeli troops thwarted an attempt to smuggle drugs across the border, seizing contraband worth an estimated 1.5 million shekels ($400,000), according to military officials.

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