The security sources said another man accompanying him was arrested by the army.

They identified the slain Palestinian as Mohammed Awad, 26, who they said was active in the radical group's military branch, the Jerusalem Battalions.

Israeli military sources confirmed the casualty but could not immediately establish whether the men were armed and preparing an attack or were just attempting to cross into Israel.

"In the early morning hours, forces identified two suspicious characters traveling in an area forbidden to Palestinians near the Nahal Oz kibbutz," the sources said.

They said the two had penetrated half-way into the 300-meter (yard) wide buffer zone between the collective farm, which is just inside Israel, and the Gaza Strip.