Actions such as these demolitions are highly provocative. They can only make it much more difficult to restore calm

Richard Boucher

The remarks echoed an earlier statement by the European Union and comments by British Foreign Secretary Jack Straw, who warned that an already volatile situation could be inflamed.

But on the same day, Israeli Prime Minister Ariel Sharon made remarks likely to cause further international concern, calling for the expansion of Jewish settlements on the Golan Heights.

He said that expansion was the only way to turn the settlement of the Golan, on occupied territory won from Syria in the 1967 war, into a "reality that cannot be reversed".

Fierce battle

Fresh violence erupted in the Gaza Strip after the demolitions, at the Rafah refugee camp near the Egyptian border.

At least five Palestinians and three Israeli soldiers were wounded in a gun battle that followed.

It was the fourth Gaza house demolition in several months

Palestinian witnesses said gunmen, including Palestinian Authority security forces, opened fire at the Israelis after about 11 armoured bulldozers and tanks entered the camp and demolished the houses.

The BBC's Kylie Morris in Gaza says the clearing operation was the fourth in the past few months, and the ensuing battle was one of the fiercest at the flashpoint since a US-brokered ceasefire was announced three weeks ago.

Click here for a map of Gaza

General Abdel Rajak el-Majiada, a Palestinian security official, described the overnight house demolitions as a savage attack, and said it aimed only to terrorise innocent residents.

On Monday, Israeli bulldozers levelled 14 houses under construction in a refugee camp on the northern edge of Jerusalem, provoking clashes between protesters and Israeli police.

Divisions in Israel

Divisions have emerged in the Israeli Government over whether the Palestinians were doing enough to stop violent attacks - following a Gaza suicide attack and the death of an Israeli officer on Monday from injuries sustained in a West Bank bomb explosion.

Mr Sharon and many of his cabinet ministers have harshly criticised Palestinian leader Yasser Arafat for failing to rein in militants.

The Haaretz newspaper said Mr Sharon and the more moderate Foreign Minister Shimon Peres disagreed over when Israel should begin implementing measures under a peace plan that calls for a halt to Jewish settlement building and a lifting of the blockade on the Palestinians.

So far 641 people have been killed since the beginning of the Palestinian uprising, or intifada, in September. Almost 30 have been killed since the truce mediated by CIA chief George Tenet came into effect on 13 June.