Israeli helicopter gun ships fired rockets into a residential neighborhood of Gaza City, killing three people, including one of the leaders of the Palestinian militant group Hamas.

Witnesses said the bodies of Ismail Abu Shanab and two of his bodyguards were pulled from the burning wreckage of a car that was struck by several missiles as it drove near U.N. headquarters in Gaza City.

A huge crowd of Hamas supporters converged on the scene, dipping their hands in the blood of the dead then shaking their fists vowing revenge.

News reports quoted Israeli military officials as saying the Hamas leader was the target of the strike which occurred at midday in the densely populated Palestinian city.

The missile attack came two days after a Hamas suicide bomber blew himself up on a crowded Jerusalem bus, killing 20 people and wounding more than 100.

The Gaza attack came several hours after Israeli troops moved into several West Bank towns, arresting a number of wanted militants. One Palestinian was killed in Tulkarem and at least four others were wounded.

Israel Radio said the operations are likely to continue for several days.

Israel's Security Cabinet ordered the operations following an overnight meeting. It also decided to renew its policy of "targeted killings."

Palestinian leaders also met overnight.

A statement released afterward said Palestinian security forces would begin immediately to implement security measures required by the "road map" peace plan. It also announced a ban on public demonstrations by militant groups.

Palestinian media say Prime Minister Mahmoud Abbas threatened to resign unless Yasser Arafat backed a crackdown on the militant groups Hamas and Islamic Jihad.