"We have identified five bodies. One of them belongs to a male suicide bomber who appears to have acted alone," Tel Aviv police chief David Tzuri told a news conference.

Seven people were seriously wounded in the explosion, he added.

The explosion ripped through the bustling Hacarmel market, its narrow alleys crammed with fruit and vegetable stands, at 11:15 (0915 GMT).

"I heard a very big bang, I saw lots of wounded people on the floor, crying and shouting," said a sandwich stand owner, giving his name only as Meir.

Most of the victims were rushed to hospital as fire engines controlled the blaze and police cordoned off the site for fear of secondary explosions.

"There were men and women shouting, in a state of hysteria. I was afraid there would be another bomber so I walked away immediately," said Eli Malka, 38, who has a pickles stand several hundred yards (metres) away on same alley.

The leftist Popular Front for the Liberation of Palestine group claimed responsibility for the blast.

"Amer al-Fahr, 18, one of our men from the Askar refugee camp in Nablus, was responsible for this attack," a PFLP member told AFP.

More than an hour after the blast, handfuls of people from the Zaka organisation were rummaging through the market stalls to retrieve body parts, one worker even scoured individual lettuce leaves for traces of flesh.

The bombing brings to 4,546 the number of people reported killed since the start of the Palestinian intifada in September 2000. Of the total, 3,511 have been Palestinians and 961 Israelis.

It was the first suicide attack in Israel since Hamas bombed two buses in the southern town of Beersheva on August 31, killing 16 passengers.

The attack was also the first since veteran Palestinian leader Yasser Arafat left the West Bank last Friday for urgent medical treatment in France.

"I am angry at every Palestinian, not at (Prime Minister Ariel) Sharon. Sharon wants peace, Arafat doesn't. I hope he dies. That would be good for everyone," said Meir.

"Even if he's lying on a hospital bed, he is responsible for what happened today," added the angry 45-year-old.

The Palestinian Authority quickly condemned the bombing.

"We in the Palestinian Authority condemn all operations which are aimed at civilians, Palestinian or Israeli," said negotations minister Saeb Erakat.

Asked by journalists in Ramallah whether the attack might give Israel a pretext not to allow the 75-year-old Arafat back to the West Bank city after his treatment, Palestinian security services chief Abdel al-Razzak Majaideh said he "hoped it won't have any affect".

"This tragic terror attack proves the need for the Palestinian Authority to combat terrorism and dismantle terrorist infrastructure no matter who is leading it," said Israeli foreign ministry spokesman David Saranga.

"Israel is committed to the disengagement plan and the peace process but at the same time we want to see the PA fight terror so that the region can move towards peace."