"The Israeli statement was positive on the surface, but it was not in keeping with the magnitude of the incident and the state of Egyptian anger toward Israeli actions," the MENA news agency reported quoting a cabinet statement.
"Egypt affirms its solicitude for maintaining peace with Israel, but Israel must also assume responsibility for protecting this peace," the state-run agency added.
In a rare statement earlier, Israel expressed "regrets" over the incident on Thursday in which five Egyptian soldiers were killed at its border with the Arab country.
Egypt had threatened to recall its envoy from Tel Aviv, but today''s statement stopped short of saying the same.
Egyptian state-run TV showed protesters burning Israeli flags and chanting "Egyptian blood is not cheap." Over 1,000 protesters shouted slogans outside the embassy, as a man clambered to the top floor of a high-rise housing the mission, replacing the Israeli flag with an Egyptian one.
Islamist group Jama''a al-Islamiya called for jihad against Israel and raised banners reading, "Open the door to jihad, to Jerusalem we will head, martyrs in the millions." "We should no longer stand watching or supply them with the gas they use to kill us," Waleed Abdel Latif, a member of the group, was quoted as saying by the AlMasry AlYoum.
Meanwhile, a rocket fired by militants in Gaza landed across the border in Egypt but caused no casualties.