Three Palestinians were killed and 12 were injured early Thursday, in clashes with Israeli troops in a Gaza refugee camp on the Egyptian border.
Palestinian witnesses say the clash broke out when Israeli troops entered the refugee camp and surrounded the house of a man belonging to the Palestinian militant group Islamic Jihad.
The Israeli military said armed men opened fire on their troops, threw hand grenades from the roof of the building, and fired anti-tank missiles. Israeli attack helicopters were then called in.
The Rafah refugee camp is a frequent scene of clashes between Palestinian militants and Israeli troops who frequently raid the area in search of tunnels used to smuggle arms across the nearby Egyptian border.
In overnight raids in the West Bank, Israeli forces arrested 11 wanted Palestinians, including one woman.
Meanwhile, Israeli Prime Minister Ariel Sharon's plan to dismantle Jewish settlements in Palestinian areas is drawing fire from the political right.
Israeli Tourism Minister Benny Elon pledged Wednesday to bring together other cabinet members of the conservative parties to present a unified front to prevent Mr. Sharon from winning cabinet approval for his plan.
Mr. Elon said it is essential to stop what he termed a shift to the left in government policies.
Leaders from the right have threatened to leave Mr. Sharon's coalition government if any settlements are dismantled.
Settlers have started preparing for an all-out publicity campaign to win public support for their position. Israeli television reported Wednesday that settlers against the evacuations plan large demonstrations in Tel Aviv and Jerusalem.
Israeli Cabinet Minister Ehud Olmert has been at the forefront of recent proposals to evacuate some Jewish settlements and unilaterally withdraw from most of the Palestinian area. He said those who think Israel can continue to hold those areas are living, in what he termed, "a virtual reality." He told the Israeli parliament this week that settlers would have to "move to different places of residence in the Land of Israel."