Israel has maintained a presence in Jenin for months

The incident occurred in northern Israel, close to the border with the West Bank.

Police said they spotted the car in an open field and ordered it to stop.

There was then an explosion, which Israeli police said was the two men detonating explosives once they realised they had been caught.

A similar incident was reported last Thursday, when the Israeli army said it foiled an attempted suicide attack in the West Bank town of Nablus.

Withdrawal

The incident came just after Israeli troops withdrew from the West Bank town of Jenin after completing an operation in which a senior member of Islamic Jihad, Iyad Sawalha, was killed.

We succeeded in 17 days of our operation in landing a very hard blow against the terrorist infrastructure in the town

Israel army spokesman

Sawalha, who Israel says masterminded at least two bomb attacks on Israeli buses, was shot dead in a pre-dawn raid in Jenin on Saturday.

Palestinian sources said Israeli troops had pulled back to the outskirts of the town, which they reoccupied just over two weeks ago after the second bus bomb attack.

The Jenin withdrawal coincided with Israeli Prime Minister Ariel Sharon's Likud Party announcing that its leadership election will be held on 28 November.

The election will pit Mr Sharon against his hawkish Foreign Minister Binyamin Netanyahu.

Last week, Mr Sharon called an early general election - expected to be held in January - after his centre-left coalition collapsed.

Soldier killed

Israel has maintained a presence in and around Jenin for months. It claims the town is a centre for Palestinian militants who engage in suicide bombings and other attacks against Israel.

Late on Saturday, one Israeli soldier was killed and another wounded in a bomb attack near a Jewish settlement in the Gaza Strip.

Islamic Jihad claimed responsibility, describing it as their initial response to the killing of Mr Sawalha.

The governor of Jenin, Haider Irshaid, said the army had vacated about 35 homes they had occupied as look-out posts, and had redeployed troops and military vehicles to the outskirts.

Curfew eased

Local residents say a degree of normality has returned, with children attending school for the first time in 15 days on Sunday, and shops re-opening.

Iyad Sawalha headed Israel's most wanted list

The Israeli army said it had lifted the curfew on the town.

"We have started pulling out some of our forces, since we succeeded in 17 days of our operation in landing a very hard blow against the terrorist infrastructure in the town and in the Jenin refugee camp," an army official told French news agency AFP.

Mr Sawalha died in a gun battle after Israeli troops surrounded a house where he was hiding with his wife.

He was at the top of Israel's most wanted list, because of suspicions that he had planned two serious bus bombings which killed 31 Israeli and injured scores more.

Mr Sawalha's killing was condemned by the Palestinian leader Yasser Arafat, who called it the latest in a series of Israeli crimes.

He urged the United Nations to enforce its decisions in the Arab-Israeli conflict in the same way it was seeking to do with Iraq.

Jordan shooting

In another development, Jordanian officials said one of their patrols shot and killed a man trying to cross the border into Israel early on Sunday.

A Jordanian military spokesman was quoted as saying that the man was shot after trying to attack a member of the patrol. The spokesman said an investigation was under way to establish the man's identity and why he had tried to infiltrate into Israel.

Israeli forces stepped up their border patrols after the incident. Israeli radio said it was Israeli, and not Jordanian, security forces who shot the man.