At least 10 Palestinians have been killed in a gun battle triggered by an Israeli armoured incursion into a refugee camp in the Gaza Strip.

Palestinian witnesses said the Israeli troops entered al-Bureij camp in about 40 tanks and other armoured vehicles, triggering heavy exchanges of fire with Palestinian gunmen.

It was as if the doors of hell were opened in our camp by the helicopters and the tanks

Witness Mohammed Al-Maqadama

They accused the Israelis of firing indiscriminately, and said that some of the casualties were caused when a tank shell hit a house, but Israel has strongly denied this.

The Israeli army said all of the victims were militants - at least five of them from the Islamic group Hamas - but Palestinians say all but two were civilians.

Local hospital officials said another 10 people - including a family of five - were wounded before the Israeli troops pulled out.

The Israeli Defence Force said its troops - who were backed up by helicopter gunships - came under intense fire from close quarters during the operation against "terrorist targets and infrastructure" in the area.

The incursion came hours after Israeli Prime Minister Ariel Sharon said that militants from Osama Bin Laden's al-Qaeda network were active in Gaza - a claim derided by Palestinians.

'Continuation of massacres'

Palestinian leader Yasser Arafat described the incursion as "Israeli terrorism".

"It is a new massacre," he said. "What happened is a continuation of the massacres against the Palestinian people."

"This is Israeli terrorism against our children, our women and our holy shrines from Rafah [in southern Gaza] to Jenin [in the West Bank]. Isn't what they are doing daily terrorism?"

Two Palestinian homes were targeted in the raid, one belonging to a man on an Israeli wanted list, the other a house where a known suicide bomber had lived.

The house of Ayman Sheshnya, an activist from Mr Arafat's movement Fatah who is wanted by Israel, was destroyed.

The BBC's Barbara Plett, who visited the site of the house, says it has been reduced to a heap of cinder blocks and broken cement.

Witnesses said troops also surrounded the home of Jamal Ismail, a suicide bomber who blew himself up along with another man in an boat packed with explosives off the Gaza coast last month, wounding four Israeli soldiers in a nearby navy patrol.

'Family home hit'

The camp's Mayor, Kamal Baghdadi, told the Associated Press news agency that the building hit was the home of a family called Mansour.

Mr Baghdadi and an official from a nearby hospital, Ahmed Rabah, said they believed four of the dead were from the Mansour family.

Other Palestinian reports said the tenth fatality was a woman who died in hospital of her injuries.

Ariel Sharon said al-Qaeda members had entered Gaza recently

A witness, Hassan Safi, 49, told Associated Press he was 300 metres away in his home when the missile hit.

"I rushed with my sons to the place which was all destroyed," he said.

"I myself took out two people, the helicopter was firing with machine guns at us, making it difficult to move."

Twenty-year-old Mohammed Al-Maqadama said: "It was as if the doors of hell were opened in our camp by the helicopters and the tanks."

"They have made this a bloody Eid," he added referring to the four-day Eid el-Fitr holiday celebrating the end of Ramadan.

'Common enemy'

Israel regularly sends troops into the Gaza Strip to seek out Palestinian militants it blames for suicide attacks that have killed scores of Israelis since the Palestinian uprising began.

Recently, it has also destroyed the homes of suspected militants to prevent attacks, or in retaliation for them.

The BBC's Jeremy Cooke says that the Israeli Government is keen to demonstrate to the Americans that they are facing a common enemy.