Egypt's cabinet has amended a draft counter-terrorism law so that journalists would be fined, rather than jailed, for reports that contradicted the authorities' version of any "terrorist" attack, the state news agency reported.

The cabinet spokesman told state news agency MENA on Thursday that the article had been amended to replace the jail time with a fine of between $25,000 and $65,000.

The bill, which sets up new courts for terrorism trials, was proposed after Egypt's top prosecutor died in a car bombing, and 17 members of the security forces were killed by fighters in the Sinai Peninsula.

The legislation has been condemned by rights groups, with Amnesty International saying it would grant President Abdel Fattah el-Sisi "absolute powers" to crush dissent.

One provision of the bill would have made it a criminal offence for journalists or others to report on "terrorist" attacks in a way that contradicted the official version of events, with jail terms of at least two years.

Human rights groups have accused Egyptian authorities of widespread violations since the army toppled Islamist President Mohamed Morsi in 2013 after mass protests against his rule.

Rights group said the government has rolled back freedoms that were gained in the 2011 uprising that toppled President Hosni Mubarak.

The government says it is protecting the country from armed factions, including Morsi's Muslim Brotherhood and fighters associated with the Islamic State of Iraq and the Levant group, active in North Sinai, both of which it classes as terrorist groups.

Rights groups said Egyptian prisons hold 40,000 political detainees.

Source: Agencies