EGYPT is threatening to suspend its peace treaty with Israel if Israeli troops are sent into the densely-populated Gaza border town of Rafah.

Two Egyptian officials and a Western diplomat said on Sunday that fighting there could force the closure of the territory’s main aid supply route. 

The threat to suspend the Camp David Accords, a cornerstone of regional stability for nearly half a century, came after Prime Minister Benjamin Netanyahu said sending troops into Rafah is necessary to win the four-month-old war against the Palestinian militant group Hamas.

More than half of Gaza’s population of 2.3 million have fled to Rafah to escape fighting in other areas, and are packed into sprawling tent camps and UN-run shelters near the border.

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Egypt fears a mass influx of hundreds of thousands of Palestinian refugees who may never be allowed to return.

The stand-off between Israel and Egypt, two close US allies, comes as aid groups warn that an offensive in Rafah would worsen the already catastrophic humanitarian situation in Gaza.

Global leaders have urged others to call for an immediate ceasefire to avoid further bloodshed, especially as around 80% of residents have fled their homes to Rafah and it's where the UN says a quarter of the population is facing starvation.

Hamas’s Al-Aqsa television station, meanwhile, quoted an unnamed Hamas official as saying that any invasion of Rafah would “blow up” talks mediated by the United States, Egypt and Qatar aimed at a ceasefire and the release of Israeli hostages.