Netanyahu thanked the Egyptian government for rescuing six security guards, The Daily Telegraph reported. But he also said the invasion of the embassy threatens the longstanding peace between the two countries.
"Egypt must not ignore the severe injury to the fabric of peace with Israel and such a blatant violation of international laws," a Netanyahu spokesman said.
Egyptian officials canceled police leave Saturday and declared a state of alert. A report in the newspaper al-Ahram said Prime Minister Essam Shraf, who heads the interim government, had offered to resign.
As a large demonstration turned violent late Friday, a small group of people scaled the outside walls of the high-rise building housing the embassy, The New York Times reported. They threw documents from the windows.
Mohamed Hegazy, a government spokesman, said the Cabinet had scheduled an emergency meeting. He said officials had declared a state of emergency, CNN reported.
Israel has become a focus of protest since Israeli forces killed five Egyptian security officers in the Sinai three weeks ago. The interim Egyptian government has promised to maintain the treaty signed by President Anwar Sadat in 1979, but demonstrations have called for the expulsion of the Israeli ambassador.
MENA, Egypt's official news agency, said 450 people were reported injured in clashes between police and protesters, with rocks hurled on one side and tear gas used on the other.
Israeli Defense Minister Ehud Barak said he had discussed the situation in Cairo with his U.S. counterpart, Leon Panetta, the Financial Times said. U.S. President Barack Obama urged Egypt to safeguard the embassy. The Israeli diplomatic staff in Egypt was evacuated after protesters invaded the building.
Two jets brought 86 diplomats and family members home at dawn Saturday, The New York Times reported.
"This went on for 13 hours and there was real concern for the safety and lives of our people," an Israeli official said. "The mob penetrated the embassy and at the end there was only one wall separating it from six of our people. Finally, Egyptian commandos got to them and rescued them."
Three people died and 1,049 were injured during the protests that erupted Friday night, al-Masry al-Youm reported.
"Three bodies were taken to different hospitals," the Ministry of Health said in a statement, which did not say how the three died.
The statement also said 217 people were hospitalized during the protests.
There has been tension between Egypt and Israel since five Egyptian police officers were killed on the Israel border on Aug. 18.
Egyptian officials say the officers were killed by Israeli forces. Israel has not taken responsibility for the deaths.