A militia leader wanted by Israel has been killed by a car explosion.

Israelis and Palestinians were today waiting to see if eight months of violence would wind down after prime minister Ariel Sharon called for a ceasefire - but rejected a plea to halt building work on West Bank Jewish settlements.

Israeli tanks have rolled into Palestinian-controlled territory and pounded houses with artillery as they pursued gunmen who had opened fire on Israeli forces.

Ehud Barak and all members of the Israeli government must be prosecuted as war criminals, the Palestinian information minister has said.