Israeli forces have shot dead a Palestinian suspected of having taken part in yesterday's ambush of a bus in which eight people died.

Ben Eliezer (l) promised new security measures

An Israeli soldier was also killed in a gun battle near the scene of the ambush, close to the Jewish settlement of Emmanuel in the West Bank.

Military sources say a second man fled the scene and is still being hunted by army units.

The attack has led to fresh security concerns in Israel, with doubts being cast on the army's ability to defend Jewish settlements, while maintaining its occupation of Palestinian towns in the West Bank.

Security fears

Defence Minister Binyamin Ben Eliezer visited Emmanuel on Wednesday, and promised settlers that a fence and new access road would be built.

A similar ambush at the same place seven months left 10 Israelis dead.

The army is overstretched in the West Bank, say critics

The daily Haaretz called Tuesday's attack the "first disaster" for the army's new chief of staff, Moshe Yahalon.

"How could terrorists get to the same place, conduct a very similar operation, and get away, yet again?" asked Haaretz.

Israeli army resources will be further stretched when the current period of service ends for reservists called up at the start of July.

Mr Ben-Eliezer ruled out any redeployment of troops away from West Bank cities to protect settlements, saying such a move was "impossible".

"It is not a political issue, it is a security issue," he said.

The ambush came hours after Israel reimposed a curfew on the nearby town of Qalqilya after receiving warnings of an impending attack.

Talks off

Three Palestinian groups have claimed responsibility for the ambush, in which at least 20 people were wounded.

Three Palestinian groups - Hamas, the Democratic Front for the Liberation of Palestine (DFLP) and Al-Aqsa Martyrs Brigades, linked to Yasser Arafat's Fatah party - said they carried out the attack.

The Palestinian Authority (PA) said it condemned the attack "in accordance with its policies that reject targeting civilians, Israelis or Palestinians".

The PA has not previously spoken out against attacks on Jewish settlers, whom it accuses of occupying land claimed by the Palestinians.

West Bank settlements have been ruled illegal under international law.

As diplomatic efforts to restart the Middle East peace process continue, deep divisions have emerged between the US and its allies at high-level talks in New York.

During the "quartet" talks with Russia, the European Union and the United Nations, Washington found itself isolated on the role of the Palestinian leader, Yasser Arafat, and the next step in accelerating peace efforts.

Deadly attack

The ambush was the deadliest attack against Israel since troops pushed into Palestinian-ruled territories across the West Bank after two suicide bombings in Jerusalem killed 26 Israelis in June.

Passengers fleeing the bus were shot at

Eyewitnesses said two or three Palestinians, disguised as Israeli soldiers, detonated at least one roadside bomb, causing the armour-plated bus to stop outside the settlement.

Rachel Gross, a high school student on board on the bus, said the gunmen opened fire as passengers fled.

"I got down under the seats as fast as I could, because the terrorists began firing and throwing grenades. It went on and on. It seemed like eternity," she said.

Among the dead were three members of one family - a grandmother, father and eight-month-old baby girl.

One of the wounded was a pregnant woman who was rushed to hospital and gave birth by Caesarean section. The baby died later, however.