Israel's Defense Ministry on Sunday began the construction of a sea barrier on the Gaza Strip border, a move which had been decided in the days following the 2014 Israel-Gaza conflict, a.k.a. Operation Protective Edge. "No injuries to the IDF soldiers were reported", the statement added.
The deceased were identified as 25-year-old Hussein al-Amour and 28-year-old Abdul Haleem al-Naqa, the Palestinian health ministry said.
Defence Minister Avigdor Liberman said in a statement the barrier would deny the Hamas militant group another strategic capability.
Meanwhile, Israel has started building an ocean barrier to prevent Palestinians leaving Gaza by sea, the Defence Ministry said on Sunday.
An independent inquiry into the 2014 war in Gaza by the UN Human Rights Council concluded that "the tunnels were only used to conduct attacks directed at IDF (Israeli army) positions in Israel in the vicinity of the Green Line, which are legitimate military targets".
The Al-Quds Brigades group, which is linked to the the Islamic Jihad organisation, said it would retaliate for the killings, Haaretz reported.
It said the explosive device had been hidden inside a pair of fence cutters.
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Only hours before late Saturday night, Israeli warplanes carried out an air strike in southern Gaza after four Palestinians infiltrated into Israel earlier in the day.
Israel already maintains a naval blockade on the Gaza Strip.
The soldiers arrived at the scene moments later and opened fire at the individuals, who in turn fled back to the Palestinian side of the fence, the Times said.
Over a hundred Palestinians have been killed in the rolling protests and clashes, mostly from Israeli gunfire and thousands more injured.
Hostilities over the frontier have soared since Palestinians began mass-demonstrations on March 30, which Israel deems to be cover for attempts to breach the border fence.
"The IDF and the security forces are working around the clock to defend the State of Israel, to protect the citizens of Israel and to defend the borders of Israel", the prime minister concluded.