Rescue teams have recovered the bodies of four Palestinian workers in a smuggling tunnel linking the besieged Gaza Strip to Egypt's Sinai Peninsula.

The four men - aged 22 to 45 - were reported missing last week after the tunnel collapse, with local authorities in the Gazan city of Rafah near Egypt's border blaming the Egyptian army for the incident.

"[They] were found dead after the tunnel they were working in was flooded nine days ago by the Egyptian army," they said in a statement.

The al-Aqsa Radio, run by Gaza's Islamist Hamas rulers, also reported that the tunnel caved in after the Egyptian military flooded it with water.

"After the four young men entered the tunnel, we heard one of them yelling: 'water, water' before his voice was completely gone," an eyewitness told al-Hadath news website last week.

"Three people headed to the tunnel to see what was happening, but they quickly ran in the other direction after seeing the water gushing towards the Palestinian side of the tunnel."

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Hamas has repeatedly accused Egypt of strengthening Israel's siege of Gaza by destroying the tunnels which have long been used to transport people and much-needed goods in and out of the enclave of two million inhabitants.

The Egyptian army did not confirm the information, though it has destroyed hundreds of tunnels in the area, alleging they are used to transport arms and militants.

Despite Egypt's systematic attempts to destroy the tunnels in Gaza, many Palestinians have continued to carry out increasingly perilous work underground.

In recent months, at least 20 Gazans have been killed in both militant and smuggling tunnels in the strip.

An Israeli blockade severely restricts the movement of people and goods into and out of the territory, and Egypt's sole border with Gaza has remained largely closed since the toppling of Islamist President Mohamed Morsi in 2013.