Yasser Arafat is no longer relevant to the state of Israel and there will be no more contact with him

Israeli statement

The fresh upsurge in violence threw into doubt a US peace initiative being led by special envoy Anthony Zinni.

The Israeli Justice Minister, Meir Sheetrit, said Israeli meetings with Palestinian security commanders, arranged by Mr Zinni, would now cease.

A statement from Prime Minister Ariel Sharon's office issued after a special meeting of the security cabinet said Israel had decided to hold Mr Arafat "directly responsible" for terrorist attacks.

"Yasser Arafat is no longer relevant to the state of Israel and there will be no more contact with him," the statement said.

Prominent events

28 September 2000: Ariel Sharon tours al-Aqsa mosque/ Temple Mount complex, and Intifada begins 6 February 2001: Sharon sweeps to power May: Mitchell report calls for compromise 9 August: Suicide bomber kills 15 in Jerusalem pizza restaurent 14 August: Israeli tanks roll into West Bank 12 December: Bus blast in West Bank settlement kills 10 13 August: Israel severs all ties with Yasser Arafat

It added that Israeli troops would be rapidly deployed into Gaza and the West Bank to make arrests and confiscate weapons. Plans were also being drawn up on combating militant Islamic groups Hamas and Islamic Jihad.

Shortly after the announcement, witnesses reported that Israeli tanks had fired shells at a Palestinian police checkpoint in the West Bank town of Ramallah and launched an incursion into the refugee camp of Rafah in the southern Gaza Strip.

Night of raids

Earlier, Israeli warplanes attacked the Palestinian Authority police headquarters in Gaza and the radar tower at Gaza's international airport.

Helicopter gunships fired on a radio mast near Mr Arafat's West Bank headquarters in Ramallah. Mr Arafat was evacuated from the building shortly before the attack, though Israeli spokesmen said he was not a target.

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

One woman died of a heart attack and up to 40 people were reported to have been injured in the raids.

The violence started on Wednesday afternoon with the attack on the bus, which took place at the Emmanuel settlement in the West Bank 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.

The al-Aqsa Martyrs Brigade, a group linked to Mr 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," an anonymous telephone caller told Reuters news agency.

Crackdown

The Palestinian Authority condemned the attack and said it had ordered the immediate closure of Hamas and Islamic Jihad institutions including education, health and political offices.

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

Gunmen opened fire from the surrounding hills

But the move failed to satisfy Israel, which wants the Palestinian Authority to declare the groups illegal and crack down on their military wings.

Israeli Government spokesman Avi Pazner said Israel held Mr Arafat's Palestinian Authority responsible for the bus attack.

"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.

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