Palestinians used a bulldozer to smash through the Gaza Strip’s border with Egypt today, destroying part of a barbed-wire fence hastily put up by the Egyptian army to reseal the breached frontier

In the latest twist in the days-old standoff, thousands of Palestinian onlookers gathered by the Rafah crossing at 1300GMT - the deadline at which the Egyptian Army said it would reseal the border - and cheered as militants were seen to repeatedly ram the fence.

Egyptian troops, who had tried to seal off the territory after militants blew up its border wall on Tuesday night, were seen trying to push them back using electric batons as a fresh hole was created in the fence and dozens of Palestinians were seen to spill over the border.

The breach came after a morning of running battles between Palestinian militants, civilians and Egyptian border troops today, which started with Egyptian forces turning water cannon on Palestinians trying to force their way across.

Since Tuesday night, when militants blew up the 40ft metal border wall after secretly weakening it with oxy-acetylene torches, an estimated 700,000 Palestinians have flooded into Egypt. Many returned to Gaza after buying provisions from nearby towns, but it is not known how many stayed in Egypt.

In an attempt to solve the problem after days of apparent inaction, Egyptian troops driving through the divided frontier town of Rafah today used loudspeakers to announce that the border with the Gaza Strip would be closed from 1300. An Egyptian security source said the deadline was intended to give the Gazans who have crossed over sufficient time to return home.

Similar announcements were made on the streets of the El-Arish, the North Sinai provincial capital around 45km to the west where thousands of Palestinians were believed to have gone.

As tensions rose in Gaza, Israeli air strikes killed four Palestinians in Rafah this morning in retaliation for what Israel claimed were Palestinian militant rocket attacks aimed at the southern Israeli town of Sderot.

Violence also flared in the occupied West Bank. Last night, Jewish settlers overpowered and shot dead two Palestinians who infiltrated the settlement of Kfar Etzion not far from Bethlehem, an army spokeswoman said. In a second incident, Palestinian gunmen killed an Israeli border policeman.

Israel’s deputy defence minister said yesterday that it wanted to cut its links with Gaza after the destruction of the border fence and Condoleezza Rice, the US Secretary of State, said that it was up to Egypt to ensure the security of its border with Gaza.

"It’s a difficult situation for them, but it is an international border. It needs to be protected and I believe that Egypt understands the importance of doing that," Dr Rice said. Washington said it was willing to work with Egyptian authorities to restore order but did not give details.

Israel occupied Gaza in 1967, but pulled its troops and settlers out in 2005, although it still controls the strip’s northern and eastern borders, airspace and coastal waters. It has imposed a blockade that it says is meant to counter militant rocket fire.

The international community has also largely isolated the Strip after Hamas, a group which does not recognise the peace process and the Israeli state and refuses to renounce terrorism, seized control of the territory following the military overthrow of Mahmoud Abbas, the Palestinian President. Mr Abbas's secular Fatah party, which is continuing with the peace process, still controls the West Bank.

In a fresh attempt to get to grips with the rapidly escalating conflict on its border today, President Hosni Mubarak repeated Egypt’s readiness to resume mediation efforts between Hamas and Fatah.

"Egypt is always ready to play its role of mediator to heal the wounds between the Palestinian brothers in order to ensure their unity," he said, in an interview carried by the official Egyptian MENA news agency.

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