Diplomatic and security sources said Israel would refrain from a massive retaliation for the attack and will instead focus on trying to prevent terrorists leaving the northern West Bank by tightening closures, reinstating curfews, and canceling other measures that tried to ease life for ordinary Palestinians.

Prime Minister Ariel Sharon did not even convene the security cabinet last night, instead consulting by phone with Defense Minister Benjamin Ben-Eliezer.

The attack turned Bus 841, traveling from Kiryat Shmona to Tel Aviv, into an blazing inferno of screams and burned victims. The blast and ignited fuel unleashed intense flames that sent huge plumes of smoke into the sky and at first prevented police and rescue workers from approaching the stricken bus.

It took an hour to bring the fire under control and the vehicle was reduced to to a blackened skeleton. Ammunition carried by soldiers riding the bus blew up in a chain of explosions, adding to the hazards for victims and rescue workers.

"There were explosions non-stop and the flareup was so fast that I couldn't understand how," said Michael Yitzhaki, a passenger who escaped. "It looks like the fuel tank was hit first. The flames ate up the bus with amazing speed, and with the ammunition going off as well, we didn't manage to get back in to save anyone. It was pretty terrible looking at people whom we couldn't help anymore."

"It was like an earthquake. The whole bus is burnt and nothing is left of it," added another witness, Meital Ziskin. Of the wounded, five were in serious condition and six were moderately injured; the rest were lightly injured.

Using a tactic rarely used before in the intifada, two Palestinians rammed their car into the rear of the bus while it was picking up passengers at Karkur Junction shortly before 4:30 P.M. and detonated about 100 kilograms of nail-studded explosives that packed in the car.

A few of the 31 passengers on board managed to escape, some by crawling from the windows, but others were trapped inside by the flames. The bombers, whom Palestinian sources identified as Hamdi Hasnin and Asraf al-Asmar of Jenin, were also killed. Islamic Jihad claimed responsibility for the attack (see separate story this page).

After the attack, police erected roadblocks in Wadi Ara and around Afula, Hadera and Haifa. Road 65, where the attack was launched, remained closed for several hours as police sappers checked to make sure there were no more explosives at the scene.

U.S. President George Bush, who only recently dispatched Assistant Secretary of State William Burns to the region to promote his "road map" for Palestinian statehood, condemned the bombing but said it could not be permitted to derail peace efforts.

"The president condemns the most recent attack in Israel," said White House spokesman Ari Fleischer. "It's another reminder of how it is so important for peace to be pursued and for terror to be stopped."

European Union foreign policy chief Javier Solana also denounced the bombing, demanding "more commitment to reestablish fruitful cooperation that will lead to dialogue and peace."

Israeli officials said that irrespective of what group was responsible, ultimate responsibility for the attack rested with the Palestinian Authority. Public Security Minister Uzi Landau called for disbanding what remained of the Palestinian security forces.

"We know it may be impossible to prevent all acts of terror, but the least we expect is that the Palestinians really show an effort to stop it even if they did not organize it," Foreign Minister Shimon Peres told Reuters Television from Luxembourg, where he was attending a meeting with EU officials.

"We don't feel the Palestinians ... [are using] the forces available to them, which are 30,000 or 40,000 policemen, in at least making an attempt to prevent it ... Not only people are being killed, but the peace process is being endangered."

"Palestinian terrorists are waging war in Israel's streets, cafes and on our roads," added David Baker, an official in Prime Minister Ariel Sharon's office. "The Palestinian Authority has become a prime authority of terror and could not care less about preventing it."

But PA Chairman Yasser Arafat indignantly denied this charge. "You know that the decision of the Palestinian leadership is that it is opposed to attacks against Palestinian and Israeli civilians. We reject such attacks against civilians," Arafat told reporters outside his headquarters in Ramallah.

Over the last two and a half weeks, the Shin Bet security service has received 49 specific warnings of planned terror attacks in Israel and the territories. Of these, 26 related to attempts by Hamas, 13 to Islamic Jihad, six to the Tanzim, three to the two Fronts for the Liberation of Palestine (the Popular Front and the Democratic Front) and one to Hezbollah.

Of these, 31 have been successfully foiled, mainly by the various security services, but in one case by an alert private security guard in Tel Aviv.