Seven Palestinians Killed in Gaza Strip Raid
An additional 55 Palestinians were wounded and an Israeli soldier was also hurt.
Israel's raid of the Rafah refugee camp code-named Operation Enchanted Day began around midnight on Thursday and could last several days, military sources said.
It was part of stepped-up military activity in response to last weekend's suicide bombing that killed 20 Israelis in a restaurant in the port city of Haifa.
Military officials said on condition of anonymity Israel had intelligence warnings that Palestinians planned to use tunnels to smuggle in anti-aircraft missiles weapons that could have a strategic impact on the three-year conflict.
Earlier this week, Defence Minister Shaul Mofaz ordered two more battalions into the West Bank and Gaza Strip, and decided to call up four battalions of reserve soldiers, or about 1,000 troops, after the Sukkot holiday, which ends in a week.
Most of the casualties occurred when a helicopter fired a missile at crowd, they said.
Dr Ali Mousa, director of Rafah's small Najar Hospital, said two of the dead were identified as belonging to militant groups and at least two others were civilians.
Najar Hospital did not have enough medicine and other supplies for the victims, and seriously wounded patients could not be transferred to other hospitals because of Israeli travel restrictions, Dr Mousa said.
The Israeli army bulldozed three houses it said gunmen were firing from near the border. Thunderous explosions were heard, and the military said Palestinians hurled hand grenades and fired anti-tank missiles at the forces.
The army positioned snipers on rooftops, witnesses said, and fired a tank shell at an electricity transformer, plunging the camp into darkness.
Armoured vehicles and helicopters swept into the Rafah camp on Gaza's border with Egypt, joined by special forces, including engineering units with dogs trained to find tunnels.
Military officials said Palestinians were trying to get shoulder-held Stinger missiles that could shoot down attack helicopters and civilian aircraft, and were trying to smuggle Katyusha rockets that could hit Israeli cities near Gaza.
The officials provided no evidence to back up their claims, but said Egypt was not trying to stop the smuggling.
In the West Bank, the survival of Palestinian Prime Minister Ahmed Qureia's proposed cabinet was in question after the legislature postponed a vote of approval amid intense political wrangling on Thursday.
An exasperated Mr Qureia told Yasser Arafat he no longer wants the job, but stopped short of resigning.
Meanwhile, Mr Arafat attended Friday prayers at a makeshift mosque in his compound in the West Bank town of Ramallah and seemed to be recovering from what aides said was a stomach flu.
He was still pale but looked stronger. As required in Muslim prayers, Mr Arafat repeatedly knelt on the carpet and got up, without assistance.
"He is not suffering any serious illness," Mr Arafat's personal physician, neurosurgeon Ashraf al-Kurdi, said in Amman, Jordan, on Friday.
