Israeli warplanes and helicopter gunships struck Palestinian security targets in Gaza City in the Gaza Strip this evening, wounding at least 20 people, witnesses and hospital officials said.
Israel also cut ties with Palestinian President Mr Yasser Arafat in a move that seemed likely to scupper the latest US Middle East peace efforts.
Witnesses saw the missiles slam into a compound serving several of the Palestinian security forces as well as two positions for Yasser Arafat's elite Force 17 unit some 50 metres from the Palestinian leader's Gaza office.
Israeli F-16 warplanes bombarded a Palestinian police office and Israeli naval boats fired on a Palestinian naval police post at Deir al-Balah town in the Gaza Strip.
Hospital officials said they had received at least 20 wounded people from the strikes, but could not elaborate on the exact number or nature of their wounds.
Mr Arafat was in the West Bank city of Ramallah at the time of the strike. Israel has pledged to continue military operations in Palestinian-ruled areas to dismantle what it calls terror organisations which it says the Palestinian Authority has yet to rein in.
The cabinet also decided that Mr Arafat is no longer relevant as far as Israel is concerned and that here will be no more contact with him. It said the decision did not mean Mr Arafat would be personally harmed.
Officials said the decision meant there would be no more meetings with Palestinian officials and Israel would not rely on the Palestinian Authority to fight terrorism .
"Mr Arafat will no longer be the address for Israel to take care of the terror issue and from now on we will do whatever we can as a country to defend ourselves," Israeli Justice Minister Mr Meir Sheetrit told a news conference after the meeting.