"I decided to close Israel's southern border to infiltrators and terrorists. This is a strategic decision to ensure the Jewish and democratic character of the state of Israel," Netanyahu said.
Israeli police estimate that some 100-200 labour immigrants, refugees and criminals cross illegally into Israel through the border with Egypt each week.
The prime minister's office confirmed that the barrier will include both a fence and technological measures such as radars. It clarified that while Israel "cannot allow the arrival of thousands of illegal workers via the southern border" it will remain open to war refugees.
In the first stage, the fence will be built along the border between Egypt and the Gaza Strip as well as in the area of the southern Israeli city of Eilat. Radars to detect human movement will be deployed along the entire border.
In addiction to this measure, Netanyahu announced that his government will issue in the coming weeks a draft legislation against employers of illegal workers.