Palestinians make hole to Egypt
Earlier Egyptian security forces tried to block almost all illegal entry points, using water cannon and firing warning shots to drive back crowds.
Hamas, which controls Gaza, says it backs the decision to close the border.
Hundreds of thousands have surged into Egypt to buy supplies since militants first blew holes in the border on Wednesday.
Israel has demanded Egypt take action, as it is worried about arms smuggling.
The UN has estimated that as much as half of Gaza’s 1.5 million population has crossed the border in defiance of the Israeli blockade imposed in retaliation for rocket attacks.
The large yellow bulldozer was driven to the border from the Gaza side, ploughing headlong into the border fence.
The BBC’s Ian Pannell at the border says Egyptian security forces seem to have given up their efforts to stop the Palestinians streaming through.
The incident is a humiliating setback for Cairo, which must now decide how to respond, our correspondent says.
The new breach came hours after Egyptian security forces had begun to stop Palestinians from entering their country while at the same time allowing people back into Gaza.
Riot police armed with electric batons attempted to seal the breach, while water cannons were aimed above the heads of the jostling crowd after some Palestinians threw stones.
Live shots were also fired from both sides.
Egyptian border guards meanwhile began placing piles of barbed wire and chain-link fences along the border in an attempt to re-seal it.
Those returning from Egypt said police had been using loudspeakers to announce in several nearby towns that the border would be resealed later in the afternoon.
Hamas, the Islamist movement which seized control of Gaza in June, has said it supports Egypt’s decision to close the border. It has denied any involvement in the new breach.
But unless the group agrees to help police the border, it will be very difficult to keep it closed, the BBC’s Ian Pannell in Rafah says.
The move by the Egyptian authorities came only hours after the US Secretary of State, Condoleezza Rice, urged them to secure the border with Gaza.
On Thursday evening, Ms Rice said she understood Egypt’s position was "difficult", but said: "It is an international border, it needs to be protected and I believe that the Egyptians understand the importance of doing that."
Later, Egyptian foreign ministry spokesman Hossam Zaki promised the border would "go back as normal".
Israel has stepped up its security since the border fence was destroyed, with citizens warned against travelling to the Sinai peninsula in Egypt.
A spokesman for public security minister Avi Dichter told the Associated Press news agency that police were on increased alert, because of "intelligence warnings that terrorists will infiltrate Israel".
It is also worried that militant groups based in Gaza will have taken advantage of the freedom of movement to bolster their weapons stores.
Overnight on Thursday, the Israeli military carried out two air strikes near the border, killing four suspected Hamas militants.
The commander of the Islamist movement’s military wing in Rafah, Mohammed Abu Harb, was killed along with another senior militant when Israeli missiles hit their jeep in the town, Palestinian medics said.
Another two other members of the group were killed two hours earlier in an Israeli air strike on a truck in southern Rafah.
Israel has killed more than 40 Palestinians in Gaza during the past 10 days in addition to tightening its blockade of the coastal territory, which has been used by militants to fire rockets into the Jewish state. /APA/
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