Israel has responded to a double suicide bomb attack in Tel Aviv that killed three bystanders and injured about 40 others by freezing plans to ease restrictions on Palestinians.
Israel has blamed Mr Yasser Arafat's Palestinian Authority for the explosions, but officials for the Palestinian leader denied any involvement, saying such attacks harmed Palestinian nationalist ambitions.
Defence Minister Binyamin Ben-Eliezer's office said he had decided for now to freeze measures aimed at easing hardships Palestinian civilians were suffering since the army's reoccupation of seven West Bank cities. It gave no further details.
Under the unspecified plans, detailed just hours before the attacks, trade and industry within occupied towns of the West Bank were meant to be freed up.
The attacks at a café and cinema last night followed a Palestinian bus ambush which killed seven Israelis near a Jewish settlement in the West Bank on Tuesday, shattering a month of relative calm and undermining hopes of reviving peacemaking.
"There were two suicide bombers and they are dead," Tel Aviv police chief Mr Yossi Sedbon told Israeli television. "They blew up 15 metres from each other. The explosive charges were not large."
The café was frequented by Romanian workers. It and the cinema were near the city's old bus station.
Police said the bombers killed three other people, including at least one foreign worker. About six people were seriously wounded.
The Lebanese Hizbollah group's al-Manar television station said the Palestinian militant group Islamic Jihad had claimed responsibility for the blasts in a telephone call.
Islamic Jihad officials in the Gaza Strip did not confirm the group carried out the attack but said it showed resistance to Israeli occupation would not be broken after 21 months of violence since the Palestinians rose up seeking independence.