Egypt to give Saudi Arabia two Red Sea islands
An Egyptian cabinet announcement said that technical work on the two countries' maritime boundary had shown that the islands of Tiran and Sanafir were within Saudi territorial waters.
The statement came while Saudi Arabia's King Salman was in Cairo for a five-day visit.
The Saudi leader on Sunday addressed the Egyptian parliament, where he received a thunderous welcome with repeated applause and standing ovations.
Riyadh has given significant financial and diplomatic backing to Egypt since President Abdel-Fattah al-Sisi - then head of the armed forces, toppled then president Mohammed Morsi in 2013.
Tiran and Sanafir are at the southern entry to the Gulf of Aqaba, where both Israel and Jordan maintain important ports.
Sisi's sole opponent in the 2014 presidential elections, Hamdeen Sabahy, denounced the planned handover, saying it went against the Egyptian constitution, which prohibits ceding any territory.
Sisi and Salman should "withdraw" an agreement signed on Friday on steps to define maritime boundaries, so as to avoid any impression that Saudi Arabia was "exploiting Egypt's need", Sabahy wrote on Facebook.
Five people were arrested when they attempted to stage a protest in central Cairo against the handover, according to the Cairo-based Egyptian Centre for Economic and Social Rights.
Prominent lawyer and veteran rights activist, Khaled Ali, said that he would file a court case against the proposed handover.
In a post on Facebook, he called on legal experts, historians and geographers to help him research the case.
The government explained the move by saying the islands had been temporarily protected by Egyptian forces following a request by Saudi Arabia's then-king Abdul-Aziz in 1950.
But opponents of the move said that a 1906 treaty signed by Britain and the Ottoman Empire, marking the border between Egypt and Ottoman-held Arabia, had put the islands in Egyptian territory.