Palestinians accused Israel of trying to blow up an activist of President Yasser Arafat's Fatah movement and undermine US efforts to ease violence sweeping the West Bank and Gaza Strip.
Palestinian officials said a booby-trapped car was discovered yesterday and taken to a field near Preventive Security agency headquarters in the West Bank city of Ramallah, where it exploded as an Israeli helicopter hovered overhead.
Yasser Abed Rabbo, the Palestinian information minister, identified the alleged assassination target as Mr Nasser Abu Hmeid. Mr Rabbo said two Palestinian "collaborators" with Israel had been arrested and admitted their involvement.
Asked to comment, the Israeli army said: "We are unaware of any such explosion." Palestinian television showed the charred remains of what it said was Abu Hmeid's car.
It was the second time a US-arranged meeting between Israeli and Palestinian security chiefs has been swiftly followed by a heated incident certain to keep tensions at the boiling point.
After a security meeting a week ago, Israeli soldiers shot at cars carrying the Palestinian delegation home to Gaza, wounding two bodyguards. Israel said the soldiers had shot after coming under fire.