The meeting stands in stark contrast to Morsi's statements pledging to eradicate the peninsula's terror infrastructure.
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Egypt struggles to tackle smuggling tunnels
According to the report, a "high-ranking presidential mission" met with Salafi radicals over the weekend. As result of the understandings reached in the meeting, Morsi ordered Cairo's troops out of Sinai.
Egyptian forced swarmed the area following the terror attack that left 16 Egyptian border patrolmen dead, in early August.
According to the report, the Egyptian president is seeking to "establish a dialogue with the Salafi leaders in order to stabilize the area."
Sources privy to the meeting told the newspaper that "The talks began following a high-ranking Egyptian official's arrival to the area. Ending the military operation is the result of these talks' success."
A senior military source, however, told Al-Ahram weekly, that Egypt's military operation in Sinai was ongoing.
"This operation is going ahead with full forces to establish the control and security in Sinai and clear the peninsula of all terror hubs," he said.
A security source in Rafah added that Egypt's crackdown on the area's smuggling tunnels – which Cairo closed immediately after the attack – will continue beyond the initial four months planned.
The source estimated that more than 1,000 tunnels are littering the border fence's vicinity, while so far, Egypt's security forces have only been able to shut down about 15%.
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