Two Israeli helicopters have killed six Palestinians in a missile strike in the southern Gaza Strip.

The Israeli army says a leading member of the Islamic militant group Hamas, identified as Yasser Rizek, was among the dead.

At least four missiles slammed into a car in Rafah, near Gaza's border with Egypt, killing the passengers and driver, Palestinian hospital officials said.

The strike came as Israeli forces moved back into the West Bank town of Ramallah, surrounding the headquarters of Palestinian leader Yasser Arafat.

In Gaza City, Palestinian police have surrounded the home of Sheikh Ahmed Yassin, the founder and spiritual leader of Hamas.

Shooting was reported after police announced that Sheikh Yassin had been placed under house arrest.

At least one person was reported wounded in the clash between Palestinian police and Hamas supporters.

Hamas has claimed responsibility for some suicide attacks, including last week's bombing in Jerusalem which killed 19 people, triggering the latest Israeli offensive.

Hamas threat

The militant group threatened Israel with reprisals after Monday's air strike.

Hamas leader Sheikh Yassin has clashed with Mr Arafat before

"This criminal act will not go unpunished," said Ismail Abu Shanab, a senior Hamas official.

Eleven people were wounded in the air strike, which targeted a taxi and two other cars, turning one of them into a mound of twisted metal, witnesses said.

Israel Radio said Yasser Rizek was held responsible for an attack several months ago in which four soldiers were killed, as well as other "terrorist" operations.

It was the latest Israeli strike under the policy of targeting Palestinian militants suspected of organising suicide bombings.

Arafat surrounded

Israeli tanks and other armoured vehicles with helicopter support are now surrounding Mr Arafat's battered Ramallah headquarters, where he is holed up.

Troops imposed a curfew in Ramallah

The operation followed an incursion into Qalqilya, which became the fifth West Bank town to be retaken by the Israeli army.

Troops are also occupying Bethlehem, Jenin, Nablus and Tulkarm.

The Israeli cabinet has authorised the army to take Palestinian-administered territory and hold it until suicide attacks are halted.

The cabinet is now considering the possibility of expelling relatives of suicide bombers from the West Bank.

One suggestion was that they could be taken to the Gaza Strip, which has more secure borders with Israel.

Reservists mobilised

Israel has called up 2,000 army reservists for its "crushing offensive" against Palestinian suicide bombers.

Troops used bulldozers to move debris to block the five entrances to Mr Arafat's shattered compound.

Mr Arafat was also besieged in his office for a month earlier this year.

Blow to Palestinian Authority

Palestinian cabinet minister Saeb Erekat said Israel was destroying the Palestinian Authority "to replace [it] with the Israeli civil administration and Israeli military government".

But the Israeli Defence Minister, Binyamin Ben-Eliezer, denied any such plan, saying he wanted a deployment of no more than six months.

Amid the continuing turmoil, US President George Bush has postponed a long-awaited announcement of a plan to revive peace talks.