Israeli troops and tanks moved into a Palestinian refugee camp in the Gaza Strip and the West Bank town of Ramallah early today, killing at least 17 Palestinians in their largest offensive in 17 months of conflict.

Israeli Prime Minister Ariel Sharon said he is ready to lift the virtual house arrest of Yasser Arafat, but military strikes against Palestinian targets will go on.

A Palestinian gunman opened fire at a Tel Aviv restaurant early today, killing three people and wounding 31, four seriously, before he was shot dead, police said, the latest in a spiral of attacks and counterattacks by Palestinians and Israeli forces.

A member of the militant group Islamic Jihad was killed today when the bomb he was making exploded in the West Bank town of Bethlehem, Palestinian security officials and witnesses said.