Palestinian gunmen shot dead an Israeli soldier and wounded another in a retaliatory shooting hours after a Palestinian militia leader was killed by a bomb as he emerged from his West Bank hideout.

Palestinians were today threatening revenge amid world leaders’ condemnation of an Israeli missile attack which killed eight people, including top Islamic militants and two children in the bloodiest day in the region in nearly two months.

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