Israel took control of the entire West Bank city of Hebron in the first of a series of measures intended to crack down on Palestinian militants after a shooting attack that killed 12 Israelis.
Israel decided on a military response to Friday's ambush in Hebron although tensions over the attack and any retaliation threaten to set off a new round of violence despite US calls for restraint ahead of possible military action in Iraq.
In the southern Gaza Strip, Israeli helicopter gunships fired missiles into a metal workshop, which the army said was used by Palestinian militants to make weapons. No-one was hurt in the attack.
The Gaza military strike followed hours after Israel retook control of the whole West Bank city of Hebron, sending armoured vehicles and troops into Palestinian parts of the city from which the army had earlier withdrawn.
In the first stage of what was expected to be an extensive military operation in Hebron, armoured vehicles poured into the West Bank city last night, backing up troops who commandeered homes and buildings at strategic sites.
The Friday shooting of Jewish settlers and their security escort as they walked home to the settlement of Kiryat Arba after Sabbath prayers was the deadliest in Hebron since the start of the two-year-old Palestinian uprising.
The US Secretary of State Mr Colin Powell called the attack "shocking and reprehensible." "These kinds of terrorist acts can only do enormous damage to the Palestinian cause and must stop," he said.
The Islamic Jihad group claimed responsibility for the attack, saying it was payback for Israel's killing of one of its military leaders a week ago.