Israel said the attack was targeted at Sheikh Salah Shahada - leader of the military wing of the Palestinian group Hamas.

The missile attack took place just after midnight.

In the morning Palestinians were horrified by the scenes of utter devastation.

About 140 people were injured in the attack.

Local residents accused Israel of deliberately targeting innocent civilians.

Israeli Prime Minister, Ariel Sharon, congratulated his forces on the air strike, calling it "a great success".

Palestinian soldiers stood guard at the funerals of Sheikh Salah Shahada and other victims.

Mourners carried pictures of the dead Hamas leader. The group has promised a bloody retaliation.