"We want to build an electric fence or wall on Israeli territory, north of the Gaza Strip, to create a no-man's land prohibiting access to the Palestinians and alleviate the danger to Israeli towns in the sector from the chaos in Gaza," a spokeswoman from the Defence Ministry said on Friday.
"We also want to ask the Palestinians to establish their own no-man's land of a few dozen metres (yards) in consultation with Israel," she added.
Reacting to the announcement, Palestinian Planning Minister Ghassan Khatib, accused Israel of continuing to behave as an occupation force regardless of the formal end of 38 years of military rule in the Gaza Strip.
"Israel is working on a unilateral basis. They didn't ask us to do this. Despite its withdrawal Israel is still an occupying force and is acting on this basis," Khatib told AFP.
State of chaos
Since Israel withdrew its last ground troops from the Gaza Strip at dawn on Monday, effectively ending its military presence in the territory, parts of the narrow strip of land have been flung into chaos.
Israel fears lax border controls
will lead to weapons smuggling
Egyptian and Palestinian security forces have proved largely unable to prevent thousands of people from crossing the border between southern Gaza and Egypt, adding to Israeli fears about weapons smuggling.
Meanwhile, around 100 Palestinians, Israelis and foreign peace activists demonstrated in the village of Bilin, near Ram Allah, on Friday against the separation barrier Israel is building along the occupied Palestinian territory.
"Between 15 to 20 Palestinian youths began hurling rocks at the soldiers, four soldiers were wounded lightly and IDF (army) used non-lethal means of dispersal," an Israeli army spokeswoman said.
The incident came after Israeli and foreign activists had already dispersed, she said.
Peace activists and Palestinians demonstrate at least once a week in Bilin against the separation barrier, which Israel insists is necessary to prevent infiltration by West Bank fighters.
"Despite its withdrawal Israel is still an occupying force"
Palestinian Planning Minister
The Palestinians say the controversial project is an attempt to grab their land and undermine the viability of their promised state.
Israel's Supreme Court on Thursday ordered a section of the controversial West Bank separation barrier to be torn down as it imprisons thousands of Palestinian villagers in order to protect a Jewish settlement.
The United Nations' International Court of Justice issued in 2004 a non-binding ruling that parts of the 650km barrier which criss-crosses the West Bank are illegal and should be torn down.
Israel has vowed to complete the project.