The Israeli army says it has arrested a top Palestinian militant suspected of having masterminded Sunday's attack on a kibbutz which killed five Israelis, including two children.

Mohammed Naifeh, a member of Yasser Arafat's Fatah movement, had been hiding in a house in the village of Shweike, near the West Bank town of Tulkarm.

Israeli army personnel surrounded the house and called on Mr Naifeh through loudspeakers to surrender.

After negotiating through human rights organisations in a standoff which reportedly lasted several hours, Mr Naifeh agreed to give himself up.

"He was told if he gave up he would not be harmed," an Israeli army spokesman said.

"Shortly afterward he left the house and turned himself in to Israeli forces."

Further arrests

The arrest follows an incursion by the Israeli army, backed by tanks and helicopters, into Gaza City early on Thursday. Palestinian officials said it was the deepest incursion for two years.

Israel was shocked by the Kibbutz killings

Witnesses said more than 50 Israeli vehicles entered the As-Sabra neighbourhood, to within 200 metres of the home to Sheikh Ahmed Yassin, founder and spiritual leader of the militant Islamic group Hamas.

Three Palestinians were wounded by gunfire, and several men were arrested, before the Israeli forces pulled back.

Israeli soldiers also stormed the house of Yosef Meqdiad, an official in the Palestinian security services, arresting him and three of his brothers, according to relatives.

Earlier, a two-year-old Palestinian boy was killed and his mother injured after Israeli tanks opened fire on the Rafah refugee camp in the Gaza Strip.

The boy is the fourth child to die in the past five days of violence between Israelis and Palestinians.

Israeli forces also took over the West Bank town of Nablus, arresting at least 30 Palestinians in retaliation for the kibbutz shootings.

A 17-year-old youth was shot dead during the raids, after Israeli troops opened fire on a group of around 50 young men throwing stones, witnesses said.

Sharon pressure

Israel was shocked by the deaths in Kibbutz Metzer. The victims included a mother and her two young sons, aged four and five, shot as they hid under a blanket.

Sharon faces pressure from the US and within the Israeli Government

Israeli authorities say the investigation is focusing on a militant from Tulkarm, affiliated to Fatah - possibly identified as Sirhan Sirhan, a distant relative of the assassin of US Senator Robert Kennedy, who has the same name.

The renewed violence is also threatening to overshadow a new US diplomatic drive to gain acceptance for an international plan to revive peace talks between Israel and the Palestinians.

The BBC's Jeremy Cooke in Jerusalem says Prime Minister Ariel Sharon is under pressure from the Americans to keep things quiet while preparations for war against Iraq continue.

He is facing a serious leadership challenge from current Foreign Minister Binyamin Netanyahu.

On Tuesday, Mr Netanyahu vowed to eject Mr Arafat from the Palestinian territories if he is elected prime minister - a challenge which he renewed again on Wednesday at a Security Cabinet meeting.

However Mr Sharon rejected the idea, saying he had promised the US not to harm Mr Arafat physically, and that Israeli intelligence officials considered the move to be counter-productive.