The latest deaths, during shootouts with Israeli troops in Kabatiya, came shortly after an Islamic Jihad official in the Gaza Strip said the group would abide by an informal truce following a deadly week of violence.

Two Jihad militants were killed and eight other Palestinians injured in an army raid late Sunday in Kabatiya, the home town of an Islamic Jihad suicide bomber who killed five Israelis in an attack last Wednesday.

Arshad Abu Zeid, 21, and Jihad Zahaneh, 22, had been wanted in connection with the Hadera suicide attack -- the first such deadly strike since Israel withdrew its ground troops and settlers from the Gaza Strip last month.

A third man was shot dead after Israeli troops spotted several Palestinians placing a bomb in the street.

The men opened fire at the troops as they tried to flee, the army said. Israeli troops shot back and killed one Palestinian.

Twelve Palestinians have now been killed in Israeli army operations and air strikes since the suicide bombing in the northern Israeli town of Hadera.

Israel's pullout from Gaza in September had raised hopes in the international community of a genuine breakthrough in the peace process but such optimism has steadily crumbled amid persistent violence.

A senior official told AFP that Israel would continue to take action against militants as long as the Palestinian Authority did nothing.

"If the Palestinian Authority continues to do nothing about terrorism, we will," an aide to Prime Minister Ariel Sharon said.

"We are waiting for the Palestinians to decide to dismantle terrorist organisations before renewing contacts at the leadership level and moving forward," the source added.