The Israeli army has confirmed that tanks and bulldozers have rolled into Gaza City, flattening three buildings it says housed workshops where rockets were being made.

Rabbi Elimelech Shapira was shot dead near a Jewish settlement

An army statement said on Friday that the tanks withdrew after controlled explosions had blown up the workshops.

At least two Palestinians were injured during the operation, the first major incursion since an air strike in Gaza City on Monday night which killed 15 people, including nine children.

That operation led to condemnation of Israel by Arab and Western nations

The Israeli military claimed the buildings were destroyed following the firing of a rocket into the country by Palestinians on Tuesday. It caused no casualties.

It said there had been dozens of incidents involving rockets in the past few weeks.

Vengeance vowed

Israel has been bracing itself for retaliatory action from the Palestinians after its deadly attack on Monday night.

The US ambassador to Israel called for Palestinians to be given more freedom

On Thursday morning a rabbi was shot dead and another wounded in the West Bank in what appeared to be the first response by militants to the strike.

Hamas has vowed to avenge the raid, in which an Israeli F-16 jet dropped a one-tonne guided bomb on the apartment block where one of their leaders, Sheikh Salah Shahada, was staying.

He was killed, along with two members of his family and his bodyguard. Eleven others, mainly in neighbouring buildings, also died.

Israel's claims that it was unaware that bombing an apartment building might kill more people than the intended target have been rejected by the international community.

On Thursday, Egypt's President Hosni Mubarak condemned the raid as a deliberate attempt to sabotage attempts to end violence in the region.

What Mr Sharon seemed to fail to appreciate, he said, was that without peace, Israelis would be exposed to violence and killing.

'Humanitarian disaster'

And as Palestinian and Israeli officials prepared to discuss easing Israeli restrictions in the West Bank on Friday, the US ambassador to Israel urged the country to increase the freedoms of Palestinians within areas taken over by Israeli forces.

Quoted by the Israeli daily Haaretz, Dan Kurtzer said Israel must make efforts "to prevent a humanitarian disaster in the territories".

Nearly 700,000 Palestinians have been living under curfews and blockades since Israeli troops stormed into seven of eight West Bank cities, nearby refugee camps and villages.

According to figures cited by Haaretz, some 70% of Palestinians live under the poverty line, surviving on less than $2 a day per person, while more than 20% of children under the age of five suffer from malnutrition.