Energy Minister Yuval Steinitz, a member of the ruling Likud party, said on Saturday that Egypt's President Abdel Fattah al-Sisi "did flood a large part of the tunnels between Gaza and Sinai", calling it a "good solution".
The Palestinian coastal enclave's southern border with Egypt's Sinai Peninsula is significantly shorter than its eastern border with Israel.
"Let's say that if Sisi did do it, it's to a large extent due to requests and pressure from us," he said.
Israeli officials say Hamas, the Islamist movement that rules Gaza, is rebuilding tunnels that could be used for attacks against Israel.
In late 2014, Egypt began setting up a buffer zone on its border with Gaza, and destroyed hundreds of tunnels it says are used for smuggling weapons and other items.
In September 2015, Egypt carried out digging work that Palestinians say led to the flooding of the last remaining tunnels there.
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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 also remained largely closed since 2013.
Hamas has accused Egypt of adding to the siege of Gaza by destroying tunnels which have long been used to transport people and goods in and out of the enclave of some 1.8 million inhabitants.
On January 29, Hamas chief Ismail Haniya said the group was ready for a new confrontation with Israel, thanks in part to the reconstruction of tunnels.
A spokeswoman for Steinitz said in a statement to AFP that "the impression" his remarks created, "as though the Egyptian campaign against the tunnels is a result of an Israeli request, is wrong and does not reflect reality".
Egypt is reluctant to be seen in the Arab world as acting against the Palestinians.
Steinitz reportedly angered Israeli defence officials by making the comments.
Since 2013, jihadist groups have stepped up their attacks against Egyptian security forces in the northern Sinai Peninsula.
Hamas lost a major ally when Egypt's then army chief Sisi toppled Islamist president Mohamed Morsi in 2013, and has had strained relations with Sisi ever since.
Steinitz said on Saturday that "security coordination between Israel and Egypt is good and stronger than ever before".