Israeli forces have killed a Palestinian militant commander and two other people in an attack on the Balata refugee camp outside Nablus.

In a statement, the Israeli military described one of the dead, Mahmoud Titi, leader of the al-Aqsa Martyrs' Brigades group at the camp, as a "senior terrorist" who was responsible for many attacks against Israelis.

Eyewitnesses said tanks positioned on Mount Gerizim, which overlooks the camp, fired shells although reports said helicopter gunships were used.

The attack came just after Israeli Prime Minister Ariel Sharon won a reprieve for his government in parliament after the coalition was threatened by a split over spending.

The al-Aqsa Martyrs' Brigades - an offshoot of Yasser Arafat's Fatah movement - has claimed responsibility for attacks on Israel in the past.

Earlier on Wednesday, Israeli troops cut off movement of Palestinians between the northern and southern Gaza Strip and raided a West Bank village in a hunt for militants.

Israel has been combing the Nablus area for militants

The army said it had blocked a main intersection in Gaza in response to mortar bomb attacks on Jewish settlements, while armoured vehicles drove into the village of Salfit, near Nablus, to carry out house-to-house arrests.

Scores of Palestinians were questioned and at least 13 arrested.

Two Palestinians were also killed by Israel forces in separate incidents in the West Bank, near Jenin and Bethlehem in the south, Israeli military sources said.

Boost for Sharon

Israel's parliament, the Knesset, passed an emergency finance bill on Wednesday, as requested by Mr Sharon.

The austerity package of tax increases and welfare cuts is designed to help pay for Israel's military operations against the Palestinians.

Sharon's plan

$1.25bn spending cuts $625m tax rises Public wage freezes 4% cut in social security payments

The government warned that unless the package was passed Israel's budget deficit could rise from 3% to 6% which could affect the country's credit rating.

The $2.7bn austerity package had been voted down on Monday, after members of the ultra-Orthodox Shas party and the ultra-Orthodox United Torah Judaism (UTJ) party refused to support the measure.

Sharon's government is intact

Mr Sharon sacked all cabinet and junior ministers from the two parties, signalling that he would not tolerate dissent within government ranks.

The BBC's Jeremy Cooke says the vote in the Knesset means Mr Sharon has not only survived a potential political crisis, he has emerged from the turmoil with his personal power and credibility strengthened.

With Shas and UTJ out of the government, Mr Sharon's coalition would control just 60 of the 120 seats in parliament.

But at least one opposition party, the secular Shinui party, is expected to join Mr Sharon and the government seems to be in no immediate danger of falling.