UPDATE 4-Egypt's Mursi condemns Israel, orders prime minister to Gaza
* Egypt PM, security chief to visit Gaza on Friday
* Biggest challenge yet for Mursi
By Marwa Awad and Omar Fahmy
CAIRO, Nov 15 (Reuters) - President Mohamed Mursi condemned Israeli air strikes on the Gaza Strip as unacceptable aggression on Thursday and ordered Egypt's prime minister to visit the besieged enclave in a show of support for the Palestinians.
Facing his biggest test since becoming Egypt's first popularly elected president this year, Mursi - whose roots are in the Muslim Brotherhood - has to balance the need to show solidarity with fellow Islamists running Gaza with the country's dependence on about $2 billion a year in U.S. aid.
"We are in contact with the people of Gaza and with Palestinians and we stand by them until we stop the aggression," Mursi said in a televised address. "The Israelis must realise that this aggression is unacceptable and would only lead to instability in the region."
A cabinet source said the prime minister and intelligence chief would visit Gaza on Friday to meet officials from Hamas, which runs Gaza, and show support to Palestinians. Presidential spokesman Yasser Ali said the health minister and some of Mursi's assistants would accompany the prime minister.
Egypt has already recalled its ambassador to Israel and appealed to the UN Security Council to end the fighting in which 16 Palestinians, five of them children, and three Israelis have been killed.
But sending a high-level delegation would raise the stakes - potentially forcing Israel to choose between suspending its shelling of Gaza or risking the lives of senior officials from a country with which it signed a peace treaty in 1979.
A senior Brotherhood source close to the presidency told Reuters Mursi considered the prime minister's trip to Gaza in the midst of Israeli strikes a "heroic and historic move" that showed the presidency taking strides in its foreign policy.
"The timing of the visit is very important because it shows the new presidency is sending its head of government to Gaza," the source said.
Mursi had earlier looked more subdued and ill-at-ease than usual when he appeared on television to tell Egyptians about Cairo's response to the air strikes which began on Wednesday.
It was the first time he mentioned Israel by name in a public address. Ties between the two neighbours were never warm but have cooled further since Mursi's predecessor Hosni Mubarak, a staunch U.S. ally, was deposed in a street revolt last year.
Mursi faces an uncomfortable dilemma in his relations with Israel. While keen to acknowledge widespread popular antipathy to the Jewish state, he also needs to persuade Western powers that they need not fear an Egypt governed by Islamists.
The Brotherhood describes Israel as a racist and expansionist state, although Mursi has pledged to respect the peace treaty that ended a succession of wars with Israel.
The head of the Brotherhood, the country's most organised group, called for nationwide protests to support the people of Gaza. Demonstrations were also planned for Friday.
Dozens of youths protested in front of the Arab League headquarters in Cairo and burned Israeli flags, chanting: "We will not give in, no matter how much the brutality grows." Protesters in the port city of Alexandria also burned Israeli flags.
Mursi said he had spoken by phone with U.S. President Barack Obama and discussed "ways to reach calm and end the aggression".
He said he told Obama of "how keen we are (to maintain) relations with the United States but also our absolute rejection of this aggression and the spilling of blood and the blockade of Palestinians".
He said U.N. Secretary General Ban Ki-moon had promised to relay his demand for an end to the violence to the Israelis.