The ministry said in a statement that the security forces raided a training camp for new recruits in Ismailia organised by terrorists who had reached there from across the country.
The new recruits were being given physical training and lessons in use of weapons at the camp, it said.
"When the police approached the camp, the terrorists opened fire on them," it said, adding that 14 terrorists were killed in gun battle.
Five of the 14 terrorist were being sought by authorities for attacks related to the Islamic State, the statement added.
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The two terrorists belonged to the Hasm group, which has claimed several attacks against judges and policemen near Cairo in the past one year.
Egypt has witnessed terrorists attacks since the January 2011 revolution that toppled President Hosni Mubarak.
Hundreds of police and army personnel have been killed since then.
Yesterday, 23 Army personnel were killed in an attack in the North Sinai city of Rafah; more than 40 terrorists were also killed.
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