As Israel's longstanding partner in peace, Hosni Mubarak slipped into history in the face of eighteen days of intense protests by his countrymen, Israelis hoped that the new regime in Cairo would continue to respect the 31-year-old peace deal between the two sides.
However, some Israeli Arab townships and Gaza burst into celebrations soon after Egyptian Vice President, Omar Suleiman, announced the news of Mubarak stepping down.
Though there was no immediate official response to the momentous development but unnamed officials were quoted by local press as expressing cautious optimism saying, "We hope that the change to democracy in Egypt will happen without violence and that the peace accord will remain."
Israel's hawkish Prime Minister Benjamin Netanyahu had last week warned of an Iranian-style Islamist revolution in Egypt should Mubarak's rivals, the Muslim Brotherhood, eventually succeed in taking over the reigns.
Palestinians in Gaza let off fireworks and shot into the air to celebrate the resignation as the Islamist group Hamas called on Egypt's new rulers to change his policies.
"The resignation of Egyptian President Hosni Mubarak is the beginning of the victory of the Egyptian revolution," said Hamas spokesman Sami Abu Zuhri.
"Such a victory was the result of the sacrifices and the steadfastness of the Egyptian people," Abu Zuhri stressed.
Some of the Gaza residents expressed hopes that Mubarak's ouster would free them from strict restrictions imposed against them and improve their economic situation.
"We call upon the new Egyptian leadership to take an immediate decision to lift the blockade of Gaza and open Rafah (border) crossing permanently to allow people's free movement and in order for the reconstruction process of Gaza to begin," the Hamas spokesman demanded.
Egypt became the first Arab country in 1979 to sign a peace treaty with Israel and has since then continuously backed US led efforts to end the Israeli-Palestinian conflict.
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