Egypt's armed forces have killed 32 "criminal elements" in an ongoing operation against Islamists in the lawless Sinai peninsula, a military spokesman said on Saturday.

Colonel Ahmed Mohammed Ali said 38 people including "non-Egyptians" had been arrested during "Operation Sinai," which was launched on August 7, days after gunmen killed 16 soldiers at a border post.

Some of the non-Egyptians had been arrested on drugs charges, he told reporters.

"The operation will continue until its goals have been achieved... These are not just military goals but also developmental goals for the Sinai," Ali said.

The statement is likely to unnerve Israel, which had expressed "reservations" over Egypt's deployment of reinforcements in the peninsula, with which it shares a border.

But Ali insisted that "the deployment of the armed forces, on all the territory of Sinai, is not a violation of the peace treaty between Egypt and Israel."

"Our presence (in Sinai) is in the frame of coordination," with the Israelis, Ali said.

Israeli Defence Minister Ehud Barak said last week he expected the Egyptian army to withdraw its reinforcements from the peninsula at the end of the operation.

"They must act against terror and if they have to bring in troops, let them do so. And when it ends, they must take them out," Barak said in an interview with Israel's army radio.

Ali said that during Operation Sinai 31 smuggling tunnels connecting Egypt to the neighbouring Gaza Strip had been destroyed.

But "there are 225 main tunnels and each has two to three openings," he said.

The tunnels trade, which analysts estimate is worth half a billion dollars a year, has played a significant part in Gaza's economy since Israel first imposed a blockade in 2006 following the capture of one of its soldiers, who has since been released.

They are used for bringing in a wide variety of goods, including food, fuel and building materials in what many say is a lifeline for the Gaza population.

But they have also been used to smuggle weapons.

"We have seized arms, rockets, RPGs, automatic rifles," said Ali.

He said that the armed forces were eager to maintain stability in the peninsula and would only use weapons against armed elements.

"The armed forces will combat thought with thought and arms with arms. We will only use weapons with those who have weapons," Ali said.

The Egyptian government has long struggled with militancy and smuggling in the region but unrest has worsened since an uprising overthrew veteran strongman Hosni Mubarak in February last year, prompting the collapse of his discredited police force.

Bedouins living in the Sinai, where most of Egypt's luxury resorts are concentrated, had long been marginalised under Mubarak's regime.