Suspected Islamist militants in Northern Sinai have killed 25 Egyptian policemen in an ambush close to the town of Rafah on the Gaza border.

AP reports that the militants ambushed two mini-buses carrying off-duty policemen, forcing them to stop. Then, they ordered the policemen out and forced them to lie on the ground before shooting them execution-style.

Earlier, AFP and Reuters reported that the policemen were killed after militants fired rocket grenades at the buses. However, all reports relating to the nature of the attacks remain unconfirmed.

Militants and tribesmen have long used the area for smuggling and other criminal activity, such as the kidnapping of Eritrean refugees, prompting the Egyptian army to mount a major operation against terrorist cells sheltering in the area.

The latest, unprecedented attack raises concerns about a fresh surge of terrorist activity in the area, following the removal of Islamist President Mohammed Morsi in a military coup on 3 July. Militants have been targeting military facilities for nearly five weeks, causing several casualties.

Egyptian deployments in Sinai are subject to the 1979 peace treaty between Israel and Egypt.

News of the ambush comes just hours after 36 Islamists were killed while being transported to prison near Cairo.

Government sources said officials threw tear gas into the back of a prison van when they attempted a riot, suffocating them all.