The attack near the entrance to the Gush Katif bloc of settlements came as the ruling Likud Party was holding a referendum on Prime Minister Ariel Sharon's plan to pull out of Gaza. It was unclear how the attack would affect the vote.

The militants opened fire -- killing the five family members and wounding a motorist in a second vehicle -- before detonating a bomb, the army spokesman said.

Two soldiers were wounded by gunfire, and the attackers were killed by return fire, the army said.

Police said the white Citroen station wagon spun off the road after the initial shooting, then the attackers approached the vehicle and shot the occupants at close range.

The car was riddled with bullets, and the carpet inside was stained with blood. Israel Radio reported the mother had been on her way to protest against Sharon's Gaza withdrawal plan. On the car was a bumper sticker saying, "Uprooting the settlements, victory for terror."

Settlers said the family lived in the Katif settlement in central Gaza.

Israel Radio said a car belonging to CNN television had prevented further bloodshed by blocking the road after shooting broke out. There was no immediate comment from CNN.

The militant Islamic Jihad and Popular Resistance Committees, an umbrella group, claimed responsibility for the "heroic" attack in a call to the news agency.