An Egyptian court has ruled that its government's deal to hand over two Red Sea islands to Saudi Arabia is illegal.

The demarcation border agreement between Egypt and Saudi Arabia, under which Cairo would surrender control over two Red Sea islands to Riyadh, was rejected by the administrative court as illegal.

The verdict could deal a blow to President Abdel-Fattah el-Sissi's government, which has strongly argued that the agreement would bring economic benefits for Egypt.

The government also maintains that the islands of Tiran and Sanafir at the mouth of the Gulf of Aqaba are owned by Saudi Arabia, which placed them under Egyptian control in 1950 for protection.

The verdict can be appealed.

The agreement was announced in April during a high-profile visit to Cairo by the Saudi monarch, King Salman, during which he announced a multi-billion dollar aid package to Egypt.