Egypt is preparing an area at the Gaza border which could accommodate Palestinians in case an Israeli offensive into Rafah prompts an exodus across the frontier, four sources said, in what they described as a contingency move by Cairo.

Egypt, which denied making any such preparations, has repeatedly raised the alarm over the possibility that Israel’s devastating Gaza offensive could displace Palestinians into Sinai - something Cairo says would be completely unacceptable- echoing warnings from Arab states such as Jordan.

One of the sources said Egypt was optimistic talks to clinch a ceasefire can avoid any such scenario, but is establishing the area at the border as a temporary and precautionary measure.

Three security sources said Egypt had begun preparing a desert area with some basic facilities which could be used to shelter Palestinians, emphasising this was a contingency step.