At least 54 Egyptian police officers were killed when a raid on a militant hideout outside of Cairo escalated into an all-out firefight, authorities said.
The interior ministry released a statement on the operation on Friday but has so far not given any details on casualties.
The source said the situation was made worse as the militants were more familiar with the area, while the commanding officer was unable to call for land and air reinforcements due to poor telecommunications in the desert.
The interior ministry said security forces hunting down militants in the region were attacked late Friday on a road to the Bahariya oasis, some 200 kilometers (125 miles) southwest of Cairo, AFP reported.
Hasm is a group that has claimed several attacks around Cairo targeting judges and policemen since previous year. He also commanded the armed forces and police for saving Egypt over the past years from meeting the same fate of countries plagued with terrorism, the presidency statement said.More news: United States and Israel quit UNESCO; read about possible repercussions
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The fighters also used explosive devices in the attack, the sources said, adding that 16 officers died in the shoot-out and the number was expected to rise.
Meanwhile, security raids killed hundreds of militants and arrested a similar number of suspects as part of the country's anti-terror war.
He too said eight other security personnel were wounded in the attack.
Egypt has been under a state of emergency since earlier in the year when IS militants launched a series of bombings and suicide attacks that killed scores of Coptic Christians.
A fake claim in the name of the small extremist group Hasm, reported by multiple local media, spread on social media soon after the attack.