Hospital officials said a six-year-old boy,and twelve-year-old boy, and a seven-year-old girl and a senior city education official aged around 50 were killed after residents emerged from their homes to stock up on supplies. Twenty-six people were also injured, they said.

The army said its action appeared to have been an error.

Hours earlier, a Palestinian gunman killed five Israelis three illegal settlers and two security guards -- in a West Bank illegal settlement, spurring Israel to send tanks into the nearby Palestinian-ruled city of Nablus.

In an apparent response to the attack on the settlement, a convoy of illegal settlers drove into a Palestinian-ruled town near Nablus and opened fire, killing one man, witnesses said.

The violence, including two suicide bombings that killed 33 Israelis, has complicated efforts to end nearly 21 months of conflict and prompted President Bush ( news - web sites) to delay his announcement of a new vision for Middle East peace.

The Israeli security cabinet, grouping Prime Minister Ariel Sharon ( news - web sites) and top ministers, responded to the latest Palestinian attacks by confirming a decision taken earlier this week to retake and hold Palestinian-ruled land if attacks continue.

"This will happen all over the West Bank," an Israeli political source said.

Israeli forces trying to quell a revolt against occupation this week entered the cities of Jenin, Nablus, Qalqiliya, Bethlehem and Tulkarm. They have not pushed into Ramallah, where Palestinian President Yasser Arafat ( news - web sites) has his headquarters.

JENIN DEATHS

The army said it fired two tank shells to warn away a group of Palestinians who violated the curfew in Jenin and approached them as the troops searched for a bomb factory.

"As a result of the shooting three Palestinians were killed and 10 others were wounded. An initial inquiry indicates that the force erred in its action," an army statement said.

Residents said people had emerged from their homes to buy food after tanks pulled back from the city center and rumors spread that the army had lifted the curfew imposed when troops entered Jenin on Tuesday and sought out militants.

"The tanks left at 10 a.m. and people came out thinking the curfew was lifted. I was in the market buying vegetables when suddenly the tanks returned two hours later and started firing," an American peace activist, Rick Rowley, said by telephone.

Troops swept into Jenin after a suicide bomber killed 19 people on a Jerusalem bus. Another seven Israelis were killed in a suicide bombing at a bus stop in Jerusalem on Wednesday.

At least 1,413 Palestinians and 547 Israelis have now been killed since a Palestinian uprising against occupation in the West Bank and Gaza Strip ( news - web sites) began in September 2000 with talks on a Palestinian state at an impasse.

The five illegal settlers killed in Thursday's assault on Itamar settlement were a 40-year-old woman, three of her six children, aged between five and 15, as well as the security guard.

"The freedom fighter climbed a fence, entered one of the houses and opened fire at its residents," an army statement said. It said earlier reports of two gunmen were wrong.

After a stand-off, soldiers stormed the house and killed the gunman, the army said. Two other children in the house, which burned down after a bullet ignited a gas canister, were wounded by the gunman. A further two children and the father were not at home at the time.

SETTLERS ATTACK

Palestinian residents said settlers attacked the town of Howara, near Nablus, on Friday afternoon. "They opened fire, shooting at and burning part of my house and a car," said Idris Audi, the father of the dead man.

In other violence, troops shot dead a Palestinian militant in the Gaza Strip who attacked them at a border crossing with grenades. Two Palestinians at the crossing were also killed.

Troops shot dead an eight-year-old Palestinian boy in Gaza in a raid after an Israeli was seriously wounded by gunmen.

And an 11-year-old Palestinian boy died in a hospital on Friday of wounds suffered in the Israeli thrust into Jenin, according to Palestinian medics.

Violence raged despite an appeal by Arafat on Thursday for an end to militant attacks on Israeli civilians. Militant group leaders rebuffed him.

Jordan's King Abdullah said in an interview published on Friday that Arafat had substantially lost control of militant groups and even worse violence lay ahead in the Middle East.

"What I can say is that over the years I always thought Arafat was capable of controlling Palestinian public sentiment and extremism," he was quoted as telling the Belgian weekly Le Vif/L'Express. "I think that is no longer the case today."