Israeli tank shells also killed three militants in the West Bank, reportsDavid Horovitzfrom Jerusalem
A Palestinian suicide bomber killed two Israelis and injured 25 south of Tel Aviv last night.
The bomber, who had dyed his hair blond, apparently to look more like a hip young Israeli, struck hours after a second attacker had blown himself up near Jenin in the West Bank, and after the Israeli army said it had arrested a third would-be bomber, a woman, in Tulkarm.
On a day of escalating violence, Israeli tank fire killed three Palestinian militants in the West Bank, and another Palestinian was shot dead during a confrontation at a roadblock.
Last night's suicide bombing in the crowded centre of Rishon Letzion - the same town where a bomber killed 15 Israelis two weeks ago - swiftly eclipsed a crushing political victory earlier in the day by the Israeli Prime Minister, Mr Ariel Sharon, who had outsmarted his rivals to secure parliamentary support for a package of austerity measures.
The violence underlined the deeper problems facing Mr Sharon's government and the state of flux in Palestinian areas, where the Palestinian Authority President, Mr Yasser Arafat, is publicly urging a halt to suicide bombings. Some factions are backing the call, and others, such as Hamas and Islamic Jihad, are determinedly resisting it.
Indeed, while there was no immediate claim of responsibility for the Rishon Letzion blast, Palestinian sources said the bomber who blew himself up near Jenin - close to a group of soldiers, none of whom was hurt - was an Islamic Jihad member.
At least two of those injured in the Rishon Letzion blast were reported to be in serious condition. Many of the casualties, police said, were elderly Israelis - a group of pensioners who gathered regularly in the area to play cards and backgammon.
Police ascribed the relatively low death toll to the fact that the bomber had detonated his explosives outdoors, rather than in a closed area where the impact would have been greater.
Earlier yesterday evening, in Nablus's Balata refugee camp, Mahmoud Titi, a leader of the Al-Aksa Brigades, was killed by Israeli tank fire.
He was described by the army as a "senior terrorist" and was alleged to have been involved in attacks that killed 11 Israelis. Two other men killed in the same incident were members of the Tanzim militia. Elsewhere, at an army checkpoint on the edge of Bethlehem, Israeli troops shot dead a 35-year-old Palestinian, Moussa Daraghmeh, during what witnesses said was a shouting match.
On a day that also saw Israeli raids on several other West Bank towns and villages, the temporary establishment of a roadblock that severed the Gaza Strip into two, and a series of arrests, the army said it had detained a Palestinian woman in Tulkarm who was about to set out on a suicide attack.
In the Knesset, Mr Sharon oversaw the approval, on the first reading, of a financial reform package designed to heal some of the economic damage caused by nearly 20 months of Israeli-Palestinian intifada confrontation.
The bill, which had been voted down on Monday, sailed through this time, with most members of two ultra-Orthodox parties who had opposed it two days earlier now abstaining.
Nevertheless, Mr Sharon made clear he was not rescinding letters dismissing the ministers and deputy ministers from these parties - Shas and United Torah Judaism - which went into effect at midnight last night and which effectively leave him without a governing majority.
In the turbulent world of Israeli politics, the next phases of this coalition crisis are far from clear, but Mr Sharon plainly believes he has plenty of options, and opinion polls published yesterday showed some two thirds of the public backing his handling of the affair. Leaders of Shas, which holds a weighty 17 seats in the 120-member parliament and presents itself as the champion of Israel's Sephardi working-class, are privately threatening to "make life miserable" for the prime minister, and ultimately force general elections, if he does not soon welcome them back into the coalition fold. And the odds are that Mr Sharon will engineer a reconciliation within a couple of weeks at most, possibly in a deal that will secure the smooth passage of the second and third readings of the austerity package.
Behind the scenes, however, he has also been putting out feelers to a seven-member rightist faction to join the coalition. And publicly, he is giving nothing away. "Shas members have been humiliated, but he would be wise not to trample on them," the analyst Mr Amnon Abramovitch warned the prime minister last night. "That would cost him dearly later on."