The decision came following the killing of three Egyptian policemen by an Israeli tank shell on the border with Rafah in the Gaza Strip, Aljazeera's correspondent in Cairo reported on Saturday.
The three conscripts, in their early 20s, were killed in the Rafah region of Sinai, on the Egyptian side of the border, on Wednesday night.
Israel apologised for the shooting. Following the incident, Prime Minister Ariel Sharon called Egyptian President Husni Mubarak and conveyed his regrets.
Egypt demanded an inquiry and called on Israel to take all necessary steps to prevent any such incident from happening again.
Egypt is one of only two Arab states to have a peace treaty with Israel, the other being Jordan.
Relations between the two countries have been chilly since the outbreak of the al-Aqsa intifada in September 2000, with Egypt accusing Israel of heavy-handed military tactics in the occupied West Bank and Gaza.
Cairo has recently indicated a willingness to help the Palestinian Authority maintain order in Gaza once Israel carries out a unilateral plan to withdraw troops and vacate all illegal settlements from the coastal territory by the end of 2005.