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The Israelis also re-entered Jenin on Wednesday, after a suicide attack on a bus in northern Israel carried out by a man originally from the town.

The attack - the biggest since Israel's West Bank offensive - left at least 16 others dead, most of them soldiers.

Israeli forces also went back into Ramallah, storming the headquarters of Palestinian leader Yasser Arafat, demolishing buildings and firing tank shells.

The latest Israeli military actions come as Washington gears up for fresh diplomacy aimed at resolving the conflict, with the Egyptian and Israeli leaders scheduled for talks with President George W Bush.

Defiance

After Thursday's six-hour raid on his compound, Mr Arafat responded with defiance, promising it would "increase the steadfastness of our people".

"I call on all the world to see this racism and this fascism," he said. "They try to say that they can defeat us. Nobody can defeat the Palestinian people."

Arafat holds up a picture of his daughter in his ruined quarters

Two of Mr Arafat's security staff were killed in the raid and inspections of the damage showed a tank shell or rocket had punched a hole in Mr Arafat's bedroom about 1.5 metres (five feet) from where he said he was meant to have been sleeping.

However an Israeli military spokesman, Captain Jacob Dallal, denied that Mr Arafat was a target.

Israel has blamed Mr Arafat for being directly responsible for suicide attacks such as the one on Wednesday.

In March, Israeli tanks entered Mr Arafat's compound and surrounded his office, trapping the Palestinian leader inside a few rooms without a water supply or electricity for more than a month.

The Bush administration has renewed its criticism of Mr Arafat following the suicide bombing - carried out by Islamic Jihad using a car packed with explosives - but officials are reported to be concerned about Israeli forces attacking his compound.

Diplomatic efforts

Following the attack, Mr Sharon delayed by a day his departure to Washington - his sixth since Mr Bush took office.

The bus was hurled across the road by the force of the blast

Egypt's President Hosni Mubarak is due to have talks with Mr Bush at his Camp David retreat, north of Washington, on Friday and Saturday.

Mr Mubarak is trying to press the US to recognise a Palestinian state on the basis of the pre-1967 borders.

Correspondents say the current flurry of diplomatic activity has given rise to speculation that the US is preparing detailed proposals for the creation of a Palestinian state.

However a senior official was quoted as saying it was "a bit misleading to speculate or expect a 'Bush plan'".

He said Mr Bush had no concrete plan to offer, but that Washington was considering laying out a "more specific roadmap, a set of ideas" leading towards a separate Palestinian state alongside a secure Israel.