Some 130 people have been killed in almost a month of violence

And after the attack an Israeli army spokesman accused the Palestinian Authority of giving a "green light" to bombers by releasing dozens of militants from jail after the latest month of violence started.

One Israeli soldier was lightly injured in the bomb blast on Tuesday morning, in what is reported as the first suicide attack in Israel and the Palestinian territories in two years.

US concerns

Israelis and Palestinians have both blamed the attack on the Islamic Jihad, whose leader was killed exactly five years ago.

The explosion, which took place near a Jewish settlement, shattered what correspondents described as among the quietest 24 hours since the start of clashes between Palestinians and the Israeli army.

Sporadic clashes continued overnight, with an Israeli tank firing on the Palestinian village of Beit Jala, near Jerusalem, in response to Palestinian shooting at a suburb of Jerusalem.

President Clinton wants Yasser Arafat to do more

The United States has expressed "serious concerns" about reports of close co-operation between Palestinian leader Yasser Arafat's forces and militant Islamist groups to direct the uprising in the West Bank and Gaza.

President Clinton also tried to put more pressure on Mr Arafat by saying the Palestinian leader was able to "dramatically reduce the level of violence" in the West Bank and Gaza.

Militant activists

US concern was raised by reports in The Washington Post that Mr Arafat had formed "a working alliance" with Palestinian radicals he had previously put in jail.

BBC correspondent Barbara Plett says the existence of a committee including representatives from all the Palestinian factions, including Mr Arafat's Fatah movement and the Islamist Hamas, raises questions about a possible hardening of Mr Arafat's position.

Meanwhile, the Israeli Prime Minister, Ehud Barak, has moved to form a new coalition government with the right-wing Likud party, which is strongly opposed to the peace process.

In 1996, Israel was paralysed by a series of suicide bombings that killed more than 50 people.