No increase in Egyptian border troops is needed amid heightened tension with Israel over smuggling of weapons from the Egyptian Sinai into the Gaza Strip, Israel's Defence Minister Ehud Barak said Wednesday.

He was speaking after talks with Egyptian President Honsy Mubarak, his intelligence chief Omar Suleiman and Defence Minister Hussein Tantawi in the Egyptian Red Sea resort of Sharm el-Sheikh.

Speaking to reporters, Barak said the level of Egyptian forces on the border with the Gaza Strip would remain the same, as a troop increase was not the crux of the problem of weapons smuggling.

Israeli officials say tons of explosives and weapons have been smuggled through tunnels under Egypt's border with Gaza since Israel's withdrawal from the strip in 2005.

Egypt rejects Israeli accusations of laxity, saying the peace treaty with the Jewish state does not allow it to increase troops on the border. Egyptian officials say more than 100 tons of explosives destined for Gaza have been seized this year.

Both countries are committed to overcoming disagreements owing to their strategic interests, Barak said. "Both countries are partners in the fight on terror," he noted.

Earlier on Wednesday, an Egyptian man was arrested after police found 500 kilos of explosives apparently destined for Gaza in his home in the Sinai, according to security sources.

While Barak's visit was perceived as an attempt to soothe the simmering tension with its neighbours, Egyptian Foreign Minister Ahmed Abul-Gheit kept up the war of words.

Abul-Gheit accused Israel on Wednesday of orchestrating a lobbying campaign in the US to freeze part of financial allocations to Egypt.

But Barak denied such accusations, saying his country was not seeking any US moves against Egypt.

The prospects of a breakthrough was clouded by a statement by Israeli Foreign Minister Tzipi Livni, who was quoted by Israeli media as telling a parliamentary committee on Monday Egypt was doing a "terrible job" preventing Gaza militants from smuggling weapons.

In response, the Egyptian foreign ministry rejected Livni's statements on Tuesday, saying she was speaking without "weighing her words about things she should not deal with without having enough information."

Cairo was also said to be upset that Israel gave the United States a tape purportedly showing Egyptian soldiers doing nothing while smugglers operated nearby.