Israeli soldiers have exchanged fire with Palestinian gunmen and demolished the family home of a Hamas suicide bomber in the West Bank city of Jenin.
A 12-year-old boy standing at the gate to his home and a man inside his house were wounded in the shooting in Jenin, on the second day of the Israeli operation, witnesses said.
Israeli Defence Minister Shaul Mofaz, effectively rejecting a call this week by Palestinian President Yasser Arafat for a ceasefire, pledged to keep up the pressure on militant groups spearheading a three-year-old uprising for statehood.
Mofaz told Israel Radio that Arafat's choice for prime minister, Ahmed Qurie, can prove himself a peace partner only by cracking down on those organisations once he takes office.
"As long as Arafat continues to be the Palestinian leader, I don't think there's a chance to move forward in the peace process," Mofaz said.
"On the other hand, there's a desire to choose a Palestinian prime minister... When (he) is elected, he will have to prove himself by his actions - first of all, the dismantling of terrorist infrastructures," the hawkish defence chief said.
Mofaz made the remarks after President George W. Bush said yesterday a US-backed Middle East peace plan, known as the road map, had stalled. He blamed what he called Arafat's failed leadership for the setback.
Palestinian Labour Minister Ghassan el-Khatib said Bush's comments were "not constructive".
The decision by Arafat's Fatah faction to leave naming the 24-seat cabinet to the president and Qurie ensures Arafat, whom the United States hoped to sideline, will play a major role in shaping the next government.
Arafat and Qurie planned to consult in the coming days on the composition of a cabinet which Palestinian officials said would be formed next week.
The cabinet will include a US favourite, reformist Finance Minister Salam Fayyad, the officials said. A supporter of Hamas, a fundamentalist Islamic group that has killed hundreds of Israelis in suicide bombings, was also slated for a post.
Qurie was named prime minister after Mahmoud Abbas resigned saying his efforts to promote the road map had been undermined by Arafat and Israel.
Last week, Israel issued an open-ended threat to "remove" Arafat after suicide bombings killed 15 people. It accuses him of fomenting violence, an allegation he denies.