Hezbollah possesses sophisticated weapons that could be used to target Israel, a retired Lebanese army general said today, a day after the militant group’s leader promised that Israel would face a “big surprise” if it invaded Lebanon.

Israeli-Palestinian violence escalated dangerously when Israel killed five militants in airstrikes and hinted Hamas political leaders could be their next target.

Israel pounded the Gaza Strip with airstrikes today, killing five militants and hitting suspected weapons-storage sites in its campaign against Palestinian rocket squads.

Israeli planes pounded Hamas targets early today, bringing the toll in the past 24 hours of raids to 11 Palestinians killed and dozens wounded.

The Palestinian president and prime minister, locked in a violent power struggle, today agreed to pull back their forces, after a senior security commander and four of his bodyguards were killed in one of the bloodiest battles in weeks of internal fighting.

A slip of the tongue by prime minister Ehud Olmert about Israel’s nuclear policy ballooned into a domestic crisis today for the already embattled Israeli leader.

In a major expansion of its ground offensive, Israel decided to send troops deeper into Lebanon, up to the Litani River some 18 miles from the Israeli border, to clear out Hezbollah fighters and hold the territory until a multi-national force is deployed there, senior officials said today.

Israeli forces today took over an area of northern Gaza that used to be home to three Jewish settlements, creating a temporary buffer zone meant to prevent Palestinian militants from firing rockets at Israeli towns and cities.

A DRAMATIC upset in the Labour Party’s leadership contest has revolutionised Israel’s political landscape, after a fiery union leader notched a surprise win over Shimon Peres.

The Israeli military was delivering the bodies of 15 militants to the Palestinians for burial today, a day after Israel’s cabinet approved the names of 500 prisoners to be released and security commanders prepared for the handover of a West Bank town to Palestinian control.

Amram Mitzna, the Israeli ex-general who led his once-dominant Labour Party to its worst-ever election defeat in January, has resigned as party leader, dealing another blow to the country’s already battered peace camp.

ISRAEL'S Labour Party yesterday said it will not join a government led

Amram Mitzna, an unknown on the Israeli political stage a few months ago, was today facing the task of rallying his fractured Labour Party after winning the leadership election on a peace platform.

ISRAEL’S Labour Party held a ballot of its members yesterday to pick a new leader.

Israel’s Labour Party members tonight chose a relative newcomer to politics, former general Amram Mitzna, as their leader to challenge Prime Minister Ariel Sharon’s Likud in January elections, an exit poll showed.

BENJAMIN NETANYAHU was approved as Israel's foreign minister yesterday, bringing him into the Cabinet of the man he seeks to succeed as prime minister, Ariel Sharon.

PRIME Minister Ariel Sharon called early elections yesterday, heralding three months of Israeli political turmoil and deepening uncertainty in the Middle East ahead of a possible US war on Iraq.

Israeli Prime Minister Ariel Sharon today began courting ultra-nationalist MPs in a bid to rebuild his coalition, which was left in a shambles by the departure of the centre-left Labour Party.

ISRAELI Prime Minister Ariel Sharon’s broad-based coalition crumbled yesterday as ministers from the moderate Labour Party pulled the plug on the 20-month coalition which had united bitter political rivals in a common front against the Palestinian uprising.

A snap election loomed in Israel tonight after the defence minister submitted his resignation, a major step toward taking his Labour Party out of the coalition government.

Israel and the Palestinians today said they had reservations about a new US peace plan, as Washington launched its most ambitious mediation mission in months.

The leader of Israel’s Labour party has threatened to quit the coalition government over resistance to his plans to dismantle illegal Jewish settlements in the Palestinian territories.

Israeli soldiers dragged die-hard Jewish settlers off a West Bank hilltop today and dismantled mobile homes at the illegal outpost.

Two Palestinian men were shot dead today in the northern West Bank, one in a gun battle with Israeli troops, the other allegedly shot by a Jewish settler in an olive grove.

ISRAELI army sharpshooters took up positions overlooking Yasser Arafat’s compound yesterday amid reports some militants had slipped out after troops aborted a siege under US pressure.

ISRAELI troops demolished three houses of Palestinian terror suspects yesterday, while Jewish settler leaders inaugurated a new Jewish settlement near the Palestinian city of Nablus.

ISRAELI soldiers blew up three buildings in Yasser Arafat compound yesterday, rocking the office where he was holed up and sending huge clouds of smoke into the air.

A PALESTINIAN suicide bomber blew himself up on a crowded bus as it drove along a busy Tel Aviv street at lunch-time today, killing at least five other people and wounding 49.

A suicide bomber blew himself up on a crowded bus a busy Tel Aviv street at lunch-time today, killing at least five other people and wounding 49 in the second such attack in two days.

Palestinian leader humiliated

ISRAELI helicopters attacked a factory in the Gaza Strip early yesterday after Palestinians blew up an Israeli tank and killed two soldiers.

Israel intends to destroy the family homes of four Palestinians suspected of terrorist attacks that killed 36 bystanders - a punitive measure the Israelis believe also acts as a deterrent.

Israeli helicopters attacked a factory in the Gaza Strip early today after Palestinians blew up an Israeli tank and killed two soldiers.

ISRAEL’S defence minister has ordered a speedy investigation into recent killings of Palestinians, including at least eight civilians, by army fire, his office said yesterday.

ISRAELI prime minister Ariel Sharon will not let Palestinian leader Yasser Arafat return if he leaves the West Bank.

Israeli Prime Minister Ariel Sharon will not let Palestinian leader Yasser Arafat return if he leaves the West Bank, it was reported today.

Israel’s defence minister has ordered a rapid investigation into several recent killings of Palestinians by the army which have included at least eight civilians.

Israeli tank shells slammed into a Bedouin encampment in Gaza today, killing four members of a family and wounding four others.

Israeli forces fired cannons at large metal tubes floating in the Mediterranean today, trying to intercept a suspected weapons shipment heading for the Gaza Strip.

Palestinian militants pose a "cancer-like" threat to Israel and must be defeated at all costs, Israel’s new army chief has said.

Israeli tanks backed by helicopters hunted militants in the Jenin refugee camp today, returning to the scene of April’s fierce fighting.

Israeli and Palestinian security officials have reached agreement on an Israeli troop withdrawal in the Gaza Strip and Bethlehem.

ISRAELI security forces arrested 16 suspected Palestinian militants yesterday ahead of a fresh round of talks aimed at securing an Israeli troop withdrawal from some Palestinian areas.

ISRAEL is urging US officials not to delay a military strike against Iraq's Saddam Hussein, an aide to Prime Minister Ariel Sharon said yesterday.