A Palestinian gunman has shot dead two Israelis at a Jewish settlement in the Gaza Strip, according to the Israeli army.

Military sources said the Palestinian entered greenhouses in the southern settlement of Rafah alongside farm labourers and opened fire.

He also pulled out a grenade when challenged but was shot himself before it could explode.

The military wing of Palestinian militant group Hamas has claimed responsibility for the attack.

The settlement's security chief Kobi Haddad told Israel Radio: "A terrorist managed to reach the area of the greenhouses and fired a little and I killed him."

A third settler was reported to be injured in the confrontation at the settlement, which is close to the Egyptian border.

Checkpoint deaths

The attack came a day after Israeli forces killed two Palestinians during an operation in Rafah.

The army said Israeli troops had come under machine-gun fire from the two Palestinians as they approached a military checkpoint.

Correspondents say Rafah and its neighbouring refugee camp are the scene of frequent clashes and military operations.

Israel Radio said there had been warnings that militants were planning to infiltrate settlements in the Gaza Strip along with Palestinian workers who enter the Jewish areas every morning.

A BBC correspondent in Jerusalem said the workers had been searched before Wednesday's attack, but the gun had apparently already been smuggled into the settlement and hidden in one of the greenhouses.