The cross-border attack on Israel by militants in the Egyptian Sinai was a highly ambitious and well-planned assault that has left Israeli authorities more certain than ever that the area is out of control – but also with a major dilemma over how to respond.

A serious attack, potentially resulting in the deaths of many Israelis living in small communities near the border, was narrowly averted, according to senior officials.

After killing about 15 Egyptian security personnel at a base in the border town of Rafah, the militants used a pickup truck filled with explosives to breach the Egypt-Israel border, then drove an armoured vehicle more than a mile into Israel before being struck by a missile fired from an Israeli military plane. Up to eight militants were killed.

They were heavily armed and, significantly, were wearing suicide belts, thought to indicate a strong ideological motivation for the attack. A statement from the Egyptian military said 35 militants were involved and "elements from the Gaza Strip" aided the attack by firing rockets, suggesting co-ordination between Palestinian and Sinai militants.

Israel's alarm at the mounting chaos and violence in Sinai has been growing steadily since their ally, the former president Hosni Mubarak, was ousted in the Egyptian revolution 18 months ago. As well as three serious cross-border attacks – one last August in which eight Israelis were killed, one in June in which an Israeli construction worker died and the one on Sunday evening – a pipeline supplying gas to Israel has been blown up more than a dozen times.

The impoverished and neglected Sinai region has been a breeding ground for resentment and radicalism among its largely Bedouin inhabitants for years. But Israel says it now detects the presence of "global jihad" militants and groups, some loosely connected to al-Qaida.

"There is a problem with Bedouin tribes drifting towards a fundamentalist Islamic ideology, making themselves part of the Islamic jihad movement, by which I mean a loose network of small terror organisations trying to fight the current order," said Major General Dan Harel, former deputy chief of staff for the Israel Defence Forces.

One of the difficulties Israel faces is intelligence-gathering across the border.

"Israel has a good hold on what's happening in Gaza" as a result of close monitoring via aerial drones and human intelligence, said Yaakov Katz, a journalist specialising in defence and military affairs. "Sinai is much more difficult."

Even so, Israeli military intelligence had advance indication that an attack was imminent and responded swiftly when it was launched, thwarting an extremely serious incident, according to the defence minister, Ehud Barak. In Gaza, such intelligence would have resulted in a pre-emptive strike on a militant cell planning an attack – an option simply not available across the Egyptian border.

Assuming that Israel shared its intelligence with its Egyptian counterparts, the Israeli military distrusts its neighbour's willingness to take effective action to rein in militants in Sinai and exert a grip on the area. That may now change.

"I hope this will be a wake-up call for Egypt regarding the necessity to be sharp and efficient on their side," said Barak while touring the site of the attack on Monday morning.

Cairo cannot afford to ignore the loss of more than a dozen Egyptian soldiers. According to Katz, Mohammed Morsi, the new Muslim Brotherhood president of Egypt, "is going to have to deal with this. Up until now he could pretend this wasn't a big problem. But this could be a turning point. Is [the government] going to take control or allow [the region] to remain a safe haven for al-Qaida and global jihad types?"

And, indeed, within hours of the attack, Morsi was pledging to "impose full control" on Sinai, later sending helicopter gunships to join a security sweep of the area.

Israel, however, does not like to outsource its security – and does not usually shy away from taking action on foreign territory to protect its citizens and interests.

But this is a delicate situation. Since Israel and Egypt signed a peace treaty in 1979, Sinai has been a demilitarised zone, with tight restrictions on troops on the ground. Israel is unlikely to take steps which could threaten the treaty's durability, especially in the context of its concerns over the post-revolution government's commitment to the accord.

"Israel has strategic interests in keeping the peace treaty. This is why we're not attacking on Egyptian soil and instead conveying alerts we have to the Egyptian authorities in the hope they will deal with it," Harel said.

The repercussions of Israeli action across the border would be significant, Katz said.

"The end of the peace treaty, demonstrations throughout Egypt, our ambassador being kicked out of Cairo? Israel's ability to respond is very limited."

After Israeli forces shot dead five Egyptian security personnel on Egyptian soil after last August's cross-border attack, anti-Israel sentiment rose markedly and the Israeli embassy in Cairo came under violent attack.

But some are urging a robust response. According to Alex Fishman, the defence analyst for Israel's biggest-selling newspaper, Yedioth Ahronoth, the time for direct action is drawing closer.

"The political leadership in Israel … is being respectful of Egyptian honour, afraid to sneeze next to them or demand, heaven forbid, that they do anything," he wrote. "There will be no choice: Israel is approaching the point at which it will have to deal with Sinai on its own, with everything this entails, including how it will affect the relationship with Egypt. Otherwise there will be a bloodbath here in a style we have not seen before."