Israeli helicopter gunships fired missiles at a car in Gaza City, killing at least two-people and injuring 25-others. Two activists of the militant group Hamas are reported among the dead.
Helicopters fired missiles into the Sheik Radwan neighborhood of Gaza City.
Witnesses said the blast shattered windows of nearby houses. They also said blood and human body parts covered a large area around the blast. Bystanders crowded around the vehicles, some holding up bloody clothing.
Israeli officials said their target was Mohammed Deif, head of Hamas in Gaza City and known as its main bomb-maker. But Hamas has issued a statement saying that two of its militants were killed, but Mohammed Deif was not among them.
A senior Hamas official in Gaza, Abdel Aziz Rantisi said the organization would take revenge for the Israeli action.
Hamas has been in the forefront of recent suicide attacks against Israelis, including a bus attack in Tel Aviv last week that killed six-people. Mohammed Deif tops Israel's most wanted list.
The Israeli military has repeatedly used missiles to strike at vehicles carrying suspected militants. Israel says the practice is self-defense, but critics say it is state-sponsored assassination.
In earlier military action in the Gaza Strip and the West Bank, one Israeli soldier and three Palestinians were killed. In the West Bank town of Hebron a 14-month-old Palestinian baby died, reported by doctors to have been overcome by tear gas fired by Israeli soldiers re-imposing a curfew.
Elsewhere, Israeli soldiers still surround Palestinian leader Yasser Arafat's headquarters in Ramallah. Mr. Arafat and about 200 of his men have been trapped in one building of the otherwise demolished compound for the past week.
The Palestinian leader continues to defy Israeli demands to surrender some of his men, wanted for possible involvement in terror attacks against Israel.
Israeli Prime Minister Ariel Sharon defended the siege in Ramallah in an interview with the Jerusalem Post newspaper. Mr. Sharon accused Mr. Arafat of harboring some of the "biggest terrorists that exist" in his compound.
Mr. Sharon accused the Palestinians of trying to escalate violence before a possible American attack against Iraq. He said the Palestinians believe Israel will be less likely to respond for fear of heightening tensions in the region while the United States seeks Arab support for military action against Iraq.