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Two Israeli soldiers were killed in a rare shooting on the Egyptian border on Saturday, triggering a manhunt in which a third soldier and the attacker were killed, the army said.

A fourth soldier, a non-commissioned officer, was lightly wounded and evacuated to hospital, it added.

Israel's Army Radio reported that the attacker was an Egyptian policeman.

The Israeli army had initially declined to confirm media reports of the first two deaths, which happened in the early morning, while families were notified. 

The two soldiers, one man and one woman, were "killed by live fire adjacent to the border," it said in a statement.

The deadly shooting triggered a manhunt in the border area during which the third soldier and the assailant were killed, the army later added.

"A short while ago, an (Israeli) soldier was killed during an exchange of fire with an assailant in Israeli territory," it said.

"Soldiers who were nearby the soldier shot and neutralised the assailant," a statement said.

Egypt was the first Arab country to make peace with Israel following the Camp David accords of 1978 and the border is largely peaceful, although drug smugglers have occasionally exchanged fire with Israeli troops.