A 60-year-old British woman was killed and 45 people wounded when a bomb exploded at a phone booth next to a bus stop at the entrance to Jerusalem.
A British Foreign Office spokeswoman said: "We can confirm that a British national was
killed in a bomb blast in Jerusalem yesterday.
"Next of kin have been informed and we are providing consular assistance."
The device exploded as a bus pulled up, wounding people waiting at the bus stop and passengers inside the vehicle.
The 1-2kg device was packed with metal pellets to cause maximum devastation. Just seconds before the blast, a kiosk owner opposite the bus stop had phoned the police emergency number to warn of a suspicious shopping trolley left at the stop.
Jerusalem suffered dozens of bombings during the second Intifada, which started in 2000, but the last bus bombing was in 2004.
There was no immediate claim of responsibility, but one possibility was that the attack was carried out to avenge Tuesday's Israeli air strikes in Gaza in which eight Palestinians were killed, including two children.
Islamic Jihad in Gaza said the attack was "a clear and powerful message to Israel that her crimes won't be able to break the resistance". Palestinian president Mahmoud Abbas condemned both the bombing and the recent Israeli strikes. The prime minister, Salam Fayyad, denounced the bombing as a shameful act that harmed the Palestinian struggle for independence.
Israeli police said there was no intelligence information prior to the attack. Officials expressed doubt that the bombing marked the beginning of a new wave of terror.
Jerusalem mayor Nir Barkat said terror would not disrupt the day-to-day life in the capital and he stressed that tomorrow's Jerusalem marathon will go ahead.
Before departing for Russia last night, Israeli prime minister Binyamin Netanyahu said Israel would respond to those who tested its resolve. "The government, the army and Israel's citizens have an iron will to defend the country and its citizens. We will operate aggressively, with responsibility and wisely to maintain the quiet and security of the last two years," he said.