Palestinian police in the Gaza Strip have arrested more than a dozen members of the militant group Hamas, which claimed responsibility for a suicide bombing earlier this week that killed 15 Israelis.
The arrests came after an order by Palestinian leader Yasser Arafat to his security forces to prevent acts of terrorism against Israeli citizens.
Hamas claimed responsibility for the suicide bombing near Tel Aviv, and leaders of the group say members will continue to target Israelis despite Mr. Arafat's call to end terrorist attacks.
Israeli officials say they believe the bomber who blew up a pool hall in the town of Rishon Letzion came from the Gaza Strip.
The Israeli cabinet has given Prime Minister Ariel Sharon the green light to take action against what it called "terrorist targets." Israeli media reports say a military operation in Gaza, where Hamas leaders are based, is widely expected.
Hamas has carried out a series of suicide bombing attacks since the Palestinian uprising against Israeli occupation erupted in September 2000.
Meanwhile, negotiations to end Israel's military siege at Bethlehem's Church of the Nativity have stalled again.
Palestinians inside the church made a new demand that a European monitor stay with 13 militants, who are to remain inside the shrine until they are exiled to a foreign country. Israeli negotiators refused to accept the demand.
Earlier, negotiators said they had reached an agreement to transfer 26 militants wanted by Israel to the Gaza Strip to face trial in Palestinian courts.
About 85 civilians remaining in the basilica would be allowed to go free.
About 200 Palestinians, including gunmen, took refuge in the church when Israeli tanks and troops moved into Bethlehem early last month.
Some people have been allowed to leave the compound, while several militants have been killed by Israeli snipers.
The Church of the Nativity is built over the site where Christian tradition says Jesus was born.