Israel wants foreign inspectors at border crossings and ports to ensure Palestinian militants cannot smuggle in arms from Egypt after its troops leave. In recent years, large-scale smuggling has occurred in tunnels under the border.

The EU official, whose position prevented her from speaking on the record, said the European Union "is happy to play a positive role, if it's backed by all parties," including the Palestinians and Egyptians, and that consultations with Israelis and Palestinians were ongoing.

However, she expressed doubt that a deal on such a mission could be in place before Israel starts withdrawing Jewish settlers from Gaza on Aug. 17, a process which will lead to a total troop pullout from the impoverished coastal strip occupied in the 1967 war.

The issue of foreign inspectors was being discussed Monday by Israel's Security Cabinet.

An EU mission would need the backing of all EU member countries.

The move would have diplomatic significance beyond the security and logistical concerns. The EU has long sought a role in the Middle East peace process while Israel, accusing the Europeans of bias in favour of the Palestinians, has generally kept them at arm's length.

The deployment of foreign inspectors is supported by international envoy James Wolfensohn, who has been trying to broker an agreement between the two sides on border crossings.

Wolfensohn has urged Israel to make a decision on border arrangements before the withdrawal starts next week.

The EU has said a withdrawal must allow Palestinians to move freely so economic revival can take root.

The EU has said it is also willing to give more financial aid to reopen the Palestinian airport and seaport, which have been damaged by Israeli troops.

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