Prime Minister Benjamin Netanyahu approved plans on Sunday to erect a wall along part of Israel's border with Egypt and install advanced surveillance equipment.
"This is a strategic decision to secure Israel's Jewish and democratic character," Netanyahu said in a statement.
Egyptian police killed at least 17 migrants since May.
Thousands of African and other migrants have come to Israel through its porous border with Egypt over the last few years, fleeing conflict back home or searching for a better life in Israel.
Netanyahu said, "we cannot let tens of thousands of illegal workers infiltrate into Israel through the southern border and inundate our country with illegal aliens."
Israel's border with Egypt spans approximately 266 kilometers and the new wall is tipped to cost Israel more than 270 million US Dollars, taking two years to complete. The new wall will be accompanied by advanced security and monitoring installations.
Egyptian security sources in North Sinai said Israel had not informed the Egyptian authorities of its plan.
One security source said the project was an internal Israeli matter "which Egypt has nothing to do with as long as the fence is built on Israeli soil".
Egyptian Foreign Ministry spokesman Husam Zaki said the ministry would issue a statement on the plan on Monday.
Israel is also building a "separation" wall in and around the occupied West Bank.
Intended to be 709 kilometers in length, Israel had completed 413 kilometers of the wall by June 2009, according to the United Nation's Office for the Coordination of Humanitarian Affairs (OCHA).
The barrier, in reality a network of walls, fences, watchtowers and checkpoints, snakes through the interior of the West Bank, looping around Israeli settlements and fragmenting Palestinian communities.
International Criminal Court in the Hague ruled on 9 July 2004 that Israel's separation wall should be demolished in a decision that were all agreed by the judges by a margin of 14-1.
The verdict, requested by the UN's general assembly says "Israel's wall is illegal, it must be removed and adequate compensation paid," Israel has ignored this and pressed on with its construction.
The wall leaves some 80 percent of Jewish settlements on the Israeli side, leading the court to conclude that the route of the wall threatened to create "de facto annexation", with the wall itself described as severely impeding "the exercise by the Palestinian people of its right to self-determination".
Palestinians refer to the barrier as the "shame wall" and view it as nothing more than a land grab by Israel to help support and expand settlements in the West Bank.
The landmark ruling had rejected Israel arguments, saying "that the wall cannot be justified by security concerns, is detrimental to the rights of local Palestinians and violates international law.
The wall separates Israel from the Gaza Strip in the south and a network of razor-tipped and electronic fences stretches along its borders with Lebanon and Syria in the north.
Palestinians often say Israel has been working hard over the past years to Judaize the occupied lands and change its Islamic identity.
Meanwhile, Egypt is building an underground barrier along its border with the Gaza Strip that has been already under years of Israel siege.
The government workers began placing steel tubes 50 centimetres in diameter and 20 metres long one above the other.
1.5 million Gazans live under heavy Israel siege and Egypt still insists on not to opening the only Gaza border crossing in a move condemned around the world in protests, leaving Gazans desperate to digging tunnels underground and risking their lives since 2007.
A group of international lawyers and human rights activists accuse Israel of committing "genocide" through its crippling blockade of the Strip.
Related news reports:
Palestinians remind "shame wall", world marks Berlin Wall fall / PHOTO