UK Foreign Secretary Jack Straw has clashed with Israel's foreign minister over a ban on Palestinian officials attending talks in London.

The move came after suicide bombers killed 23 people in Tel Aviv on Sunday.

Instead of concentrating on dealing with terrorism [Israel] is striking at [Palestinian] delegates Jack Straw

But Israel's decision, which in effect wrecks the talks, led to an apparent diplomatic spat between foreign minister Benjamin Netanyahu, and UK counterpart Jack Straw.

A transcript of a phone conversation between the two men was published by the Israeli embassy.

According to the transcript, Mr Netanyahu told Mr Straw that the suicide bombings precluded "business as usual".

He then urged the UK foreign secretary to adopt the same position as President George W Bush "that leaders compromised by terror cannot be partners for peace".

Preventing peace?

Mr Netanyahu added: "You in Britain are doing the exact opposite."

That apparently drew a sharp reply from Mr Straw who is said to have replied: "No, it is Israel that is doing the opposite.

"Instead of concentrating on dealing with terrorism, it is striking at [Palestinian] delegates."

The row comes ahead of a meeting between the leader of Israel's opposition Labour Party Amram Mitzna at Downing Street and Prime Minister Tony Blair scheduled for Thursday.

With an election pending in Israel there was said to be anger in the rival ruling Likud camp over talks between the two men.

Mr Straw earlier "utterly and completely" condemned the attack but argued that it emphasised the need to get people around the negotiating table.

I very much hope the Israeli government will think again Jack Straw

A spokesman for Mr Blair indicated that the UK might be prepared to delay the Palestinian talks until later in January.

Earlier Mr Straw revealed that he had only heard via the media of Israel's proposed ban on those travelling to the conference on Palestinian reforms.

"The 6m people who live in Israel and the 3.5m people who live in Palestine in the occupied territories can only live in peace if they are going to have a future," said Mr Straw.

"I greatly regret the announcement I heard earlier today on your programme. I had not expected it and I very much hope the Israeli government will think again."

Foreign victims

Soon after the Tel Aviv bombings, Israeli helicopters fired rockets at a large metalworking factory in Gaza City, which Israel said was being used to make weapons. Eight people were reportedly lightly injured.

The Tel Aviv explosions - about two minutes apart - devastated the old bus station area and a busy shopping mall, injuring dozens of people, many of them foreign workers.

It was the deadliest attack inside Israel since last March.

Police said 68 injured people were still in hospital on Monday, two in critical condition and five serious.

Israeli police said the two suicide bombers - who were also killed - were carrying as much as 10 kilograms of explosives each, packed with bits of metal.

Bystanders tore off doors to use as makeshift stretchers as the area's narrow streets made it difficult for emergency services to evacuate casualties.

The attack - the first suicide bombing in Israel since November - was claimed by the Al Aqsa Martyrs Brigades, an offshoot of Palestinian leader Yasser Arafat's Fatah movement.

Prime Minister Sharon blamed Yasser Arafat for the bombings, saying he had failed to establish a ceasefire.

But he resisted a call from Mr Netanyahu to expel Mr Arafat.

Mr Sharon said that only when the terror had stopped would Israel be able to talk peace.

The Israeli army said the factory targeted in the Gaza helicopter raid on Sunday was used by several "terrorist" groups for making mortars and other weapons.

Palestinian officials denied that weapons were made there, saying it was a car parts factory.

Witnesses said Israeli tanks also moved into Rafah, in the south of the Gaza Strip, and destroyed the house of a wanted member of Islamic Jihad. Several of his relatives were detained.