"Israel must withdraw from the Salaheddin corridor before Egyptian forces move into the Egyptian-Palestinian border line," Egyptian Foreign Minister Ahmad Abu al-Ghait told reporters in Cairo on Wednesday.
Egypt and Israel were widely expected to sign an agreement on the border about two weeks ago but the signing never took place. Israel has given mixed signals about its intentions on the corridor, known to Israelis as the Philadelphi Road.
Israeli Prime Minister Ariel Sharon said in an interview last week that he hoped that weapons smuggling would end along the border so that Israel could withdraw from the corridor.
He prefers that Egypt take control of the corridor but if Israel cannot reach a satisfactory agreement then he would have some Israeli forces remain there, officials said.
Abu al-Ghait said Israel and Egypt were still discussing legal and political aspects of the Egyptian military presence and complete Israeli withdrawal from the area.
Egypt and Israel have agreed in principle that Egyptian border guards will replace lightly armed civilian police along the border to prevent smuggling.
One Egyptian official said the number of border guards would be about 750.