Clashes between Palestinian militants and Egyptian border guards are reported to have left two soldiers dead. It is understood the Egyptians were hit by gunfire as they tried to prevent Palestinians crossing from Gaza after they had broken through a barricade.
The disturbances at the Rafah border crossing were linked to Palestinian in-fighting.
Members of the militant group the Al Aqsa Martyrs Brigades initially attacked a border wall as part of protests against the arrest of one of their leaders. He was detained over the kidnapping of three Britons.
Yesterday the trouble escalated when armed men used a bulldozer to demolish a concrete barricade.
Hundreds of Palestinians were said to have poured through into the Egyptian side.
Some 18 Palestinians were reportedly injured.
The incidents are a further embarassment to the Palestinian Authority which is facing accusations that its forces have lost control of the southern Gaza Strip.
Officials met with faction leaders in a bid to calm the situation. The chaos could further undermine the dominant Fatah movement which may lose ground to the rival Hamas group in forthcoming elections.