Seven people have been killed in an attack on an Israeli bus near a Jewish settlement in the West Bank, Israeli army officials say.

The shooting was still going on and shots were fired at my car. I was lucky to get out before it was hit

Settlement security officer

The armoured vehicle was at the entrance to the northern settlement of Emmanuel when a bomb planted by the side of the road exploded.

Palestinian gunmen opened fire, injuring at least 15 other people, Israeli police said.

The attack is the deadliest since the Israeli army reoccupied most of the West Bank last month after Palestinian suicide attacks that killed more than 30 people.

A spokesman for the bus company said the vehicle "was one of the most attack-proof we have for going into the territories to protect against terror attacks," the AFP news agency reports.

Israel is holding Yasser Arafat's Palestinian Authority responsible for the attack, which comes as fresh talks on the Middle East get under way in New York.

The talks, which bring together the United States, Russia and the European Union, are to focus on President Bush's call for reform and a change of leadership within the Palestinian Authority.

President Bush has condemned the latest violence.

White House spokesman Ari Fleischer said told reporters: "This underscores the importance of focusing on peace and working with leaders in the Palestinian Authority who are dedicated to peace."

'Dressed as soldiers'

Most of the casualties in Tuesday's attack are thought to be passengers trying to get off the bus after the initial explosion and people in nearby cars.

The injured include a two-year old child and a pregnant woman, Israeli TV said.

Anytime that the Palestinians see that there is some chance for progress in the peace process, this is what they do

Israeli Government spokesman

The settlement's security officer Abraham Cohen arrived at the scene a few minutes after the explosion.

"The shooting was still going on and shots were fired at my car. I was lucky to get out of my car before it was hit,", he told the Associated Press news agency.

Some witnesses said there were about three attackers who were dressed in Israeli army uniforms and escaped in the direction of Nablus.

The area has been cordoned off and the Israeli army has launched a big search operation.

Israeli Government spokesman Arye Mekel said the attack showed "nothing has changed".

Settlements are vulnerable to attack

"Anytime that the Palestinians see that there is some chance for progress in the peace process, this is what they do," he told Reuters news agency.

An ambush on a bus in the same part of the West Bank last December killed 10 Israelis and was claimed by the al-Aqsa Martyr's Brigade - a group linked to Yasser Arafat's Fatah faction.

After December's attack, Israeli warplanes raided targets in the West Bank and Gaza.

The Israeli Government also announced it was breaking off all contact with the Mr Arafat, accusing the Palestinian leader of doing too little to halt terror attacks.