An Egyptian naval vessel was hit and caught fire in the eastern Mediterranean during a clash with militants in the restive Sinai Peninsula on Thursday, the military said.

An Egyptian naval vessel was hit and caught fire in the eastern Mediterranean during a clash with militants in the restive Sinai Peninsula on Thursday, the military said.

The patrol boat had spotted militants on the coast of Rafah and engaged them, the military's spokesman said in a statement. The boat went up in flames during an ensuing firefight.

The military said it suffered no casualties.

An AFP photographer and a witness in the Palestinian Gaza Strip, just across the border, said the boat was struck at least three kilometers (two miles) from shore.

"We were sitting on the beach and suddenly there was an explosion," said Ahmed Nofal.

Other navy boats came to rescue the crew as their vessel spewed a plume of smoke.

'Jihadists' loyal to ISIL group have killed scores of soldiers and policemen in the peninsula since the army's overthrow of Islamist president Mohammad Mursi in 2013.

It was not immediately clear how the boat was hit Thursday, but militants have started to deploy wire-guided missiles against tanks and armored vehicles.

The militants have also carried out attacks west of the Suez Canal, which separates the Sinai from the rest of Egypt.

The army said on Wednesday its troops foiled a suicide car bomb attack on a military post between Cairo and Suez that was claimed by the ISIL's affiliate in Egypt.