Iran on Tuesday said it is dismissing Israeli threats of an imminent attack, explaining that even some Israeli officials realized such a "stupid" act would provoke "very severe consequences."

"In our calculations, we aren't taking these claims very seriously because we see them as hollow and baseless," foreign ministry spokesman Ramin Mehmanparast told reporters in a weekly briefing.

Israel is watching "with great concern" the developments in Egypt where Islamist President Mohammed Morsi ousted his powerful defence minister and army chief following a deadly attack in Sinai.

In a surprise move aimed at curbing the Egyptian army's sweeping powers, Morsi on Sunday forced retirement upon both Field Marshal Hussein Tantawi and the army's Chief of Staff Sami Anan.

An Israeli soldier implicated in the killing of two Gaza women carrying a white flag faces a 45-day jail term under a plea bargain approved by a military court on Sunday, local media said.

The sniper, identified by Israeli media as "staff sergeant S," was charged with manslaughter in 2010 over the fatal shooting of an unnamed individual, which Palestinian witnesses linked to the killing of 64-year-old Riyeh Abu Hajaj and her daughter Majda Abu Hajaj, 37, during Israel's "Cast Lead" Gaza offensive.

The Palestinian Authority has condemned the network of smuggling tunnels between Hamas-run Gaza and Egypt as a "threat" to security and lauded Cairo's campaign to seal them.

Speaking a week after a deadly attack which killed 16 Egyptian border police in northern Sinai, Tayeb Abdelrahim, chief of staff to Palestinian President Mahmoud Abbas, expressed full support for Egyptian moves.

Israel on Sunday began testing an SMS system for warning the public of an imminent missile attack as chatter over a possible strike on Iran dominated the Israeli press headlines.

As testing began, Prime Minister Benjamin Netanyahu said Israel had chalked up "a significant improvement" in its home front defense capabilities, mentioning its highly-vaunted anti-missile systems such as Iron Dome and Arrow 2.

Egypt has asked Gaza's Hamas rulers for information on three members of an Islamist group suspected of involvement in a deadly attack on a military outpost, a senior security official said on Saturday.

He said Egyptian authorities had received a list of nine suspects from Israel, and asked the Palestinian Islamist movement Hamas to provide information on three of the men.

Israeli deputy Foreign Minister Danny Ayalon noted on Friday that the Arab world is passing through a phase that will restore it back to the way it was before World War I, reported Israel Radio.

He also predicted Syria’s fragmentation into provinces, adding that Lebanon will suffer the same fate in the future.

Talk of a possible military strike on Iran's nuclear facilities dominated the Israeli press on Friday, a day after Defense Minister Ehud Barak said the issue had become more "urgent."

"(Prime Minister Benjamin) Netanyahu and Barak are determined to attack in Iran in the autumn," trumpeted a front-page headline in top-selling daily Yediot Aharonot.

The Egyptian army has arrested six "terrorists" during a sweep in the Sinai Peninsula following a raid at the weekend that killed 16 soldiers, military and security sources said on Friday.

A Lebanese cabinet minister hinted on Friday that Israeli claims of explosives smuggling through the Lebanese-Israeli border were aimed at covering up the failure of the Jewish state to withdraw from the Lebanese side of the border village of Ghajar.

The minister, who was not identified, did not rule out that the charges against at least eight Arab-Israeli men of transferring explosives to Israel, were an excuse to cover up Israeli troops’ continued occupation of the northern part of Ghajar.