We are preparing for any possible incursion by the Zionist enemy into Gaza and if it happens we are ready with what we have our light weapons and pipe bombs

Palestinian fighter

But now Israel's Defence Minister Binyamin Ben-Eliezer says he is ready to look again at a proposed attack because details of the military plans have been extensively leaked.

In Bethlehem, residents have been flocking to Manger Square to celebrate the peaceful end of the six-week siege of the Church of the Nativity and the withdrawal of Israeli forces.

Media leaks

Mr Ben-Eliezer directed the change of course at a meeting with senior military officials late on Friday, insisting that it was a purely military decision not the result of any foreign intervention.

In recent days, Israeli newspapers have carried detailed reports on likely targets, including a claim that a strike would be launched against the house of Sheikh Ahmed Yassin, the spiritual leader of the Islamic militant group, Hamas.

According to Israeli public radio, Israel is now moving towards preparing a more limited operation with specific targets rather than a large scale incursion.

Israel faced widespread international condemnation for the impact on the civilian population caused by last month's incursions into the West Bank.

The Gaza Strip is even more densely populated - with 1.2 million people crammed into a narrow strip of 360 square kilometres (140 square miles) - and any widespread military offensive could result in large-scale civilian casualties.

Troop build-up

Israeli officials also believe that many of the Palestinians they were targeting have now gone underground. There are also fears that the Palestinian have had sufficient time to prepare booby traps around possible targets.

But some are still arguing that the Gaza attack should go ahead. A day before Tuesday's suicide bombing, Israel's army chief General Shaul Mofaz warned of "an even broader and deeper operation" than that in the West Bank if terrorist attacks continued.

In Gaza the Palestinians are readying for battle

The BBC's Michael Voss in Jerusalem says Israel's military build-up around Gaza is continuing and that none of the army reservists called up on Thursday have been stood down.

In Gaza, Palestinian militants have been preparing for a fight and residents stocking up on food.

"We are preparing for any possible incursion by the Zionist enemy into Gaza and if it happens we are ready with what we have our light weapons and pipe bombs," one masked militant said.

Bethlehem comes alive

The freeze on operations follows the end of the siege at the Church of the Nativity in Bethlehem.

On Saturday the people of Bethlehem began their first day in more than five weeks free of Israeli army control.

BBC correspondent Jonny Dymond says the streets of Bethlehem are packed; music blares out of shops and sacks of fresh food clutter the narrow lanes.

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Hundreds of Palestinians pushed past barriers that encircled Bethlehem's holiest shrine throughout the 39-day standoff, some running up to the church compound and touching the stonework.

The church bells were rung for several minutes.

Inside the church damage was found to be mostly superficial, although the church reeked of waste and was strewn with rubbish, dirty dishes, blankets and cigarette butts.

Greek Orthodox and Franciscan monks held thanksgiving prayers in the church on Friday, but a public mass planned for Saturday morning has been postponed for a day to allow the church to be cleaned.

The Israeli army said its soldiers had found 40 explosive devices during a search of the church following its evacuation.