Arafat was not in Gaza during the Israeli raid

Planes also struck a helicopter pad belonging to Mr Arafat in the West Bank city of Nablus.

The Palestinian Authority said it had ordered the immediate closure of Hamas and Islamic Jihad institutions including education, health and political offices in response to the attack on the bus at the Emmanuel settlement in the West Bank.

Israeli Government spokesman Avi Pazner had earlier said that Israel held Mr Arafat's Palestinian Authority responsible for the attack on the bus, and would "certainly find a way to respond".

"It is obvious here that their activity has not been curtailed at all by the Palestinian Authority and that the talk of arrests and action against terrorists were just a show for television," Mr Pazner said.

Attack claim

The al-Aqsa Martyrs Brigade, a group linked to Palestinian leader Yasser Arafat's Fatah faction, said it carried out the attack, which also left about 30 people injured.

"This is in response to the recent killings by the Israelis in the West Bank and Gaza Strip," said an anonymous telephone caller speaking to Reuters news agency.

In another incident earlier on Wednesday, two suicide bombers blew themselves up near the Neveh Dekalim Jewish settlement in the Gaza Strip, wounding four people.

The US special envoy to the Middle East, Anthony Zinni, told Mr Arafat to jail extremists "immediately", after news of the bus shooting came through.

The Palestinian Authority condemned both the attacks, and said it was trying to improve the security situation.

"The leadership reiterates that it is working continuously to reinforce calm and security despite continued Israeli escalation, bombardments and assassinations," said a statement.

'Arafat's answer'

Wednesday's violence came despite a call from Mr Zinni for 48 hours of calm.

He made his appeal after talks on Tuesday with Israeli and Palestinian security officials.

The retired US general had asked Israel to refrain from attacking Palestinian targets for another 48 hours to give Palestinians a chance to crack down on extremist groups.

Gunmen opened fire from the surrounding hills

"Those terrorist acts are probably Yasser Arafat's answer to General Zinni's request for a 48-hour ceasefire. Apparently Arafat and the Palestinian Authority can speak only the language of terrorism and death," an Israeli foreign ministry spokesman said, after Wednesday afternoon's attacks.

The Emmanuel ambush took place at dusk, around 1800 (1600GMT), as the bus was driving up a winding hilly road towards the settlement.

An Israeli army spokesman said that an explosion caused by a bomb on the road, or a suicide bomber, caused the bus to stop.

Gunmen then opened fire from the surrounding hills on both sides of the road.

"They not only fired on a bus but shot at ambulances trying to rescue victims," said an Israeli army spokesman.

Gaza funerals

Earlier in the day, funerals took place in Gaza of four Palestinians killed in Israeli helicopter attacks on Tuesday night.

Large crowds turned out for the funerals in Gaza

Israel said that the men were behind repeated attacks on a Jewish settlement.

The men were buried in a cemetery on the edge of the Khan Yunis refugee camp, only metres from where they were killed.

The four men belonged to the Abu Rish faction, an armed group affiliated to Fatah.