Palestinian witnesses and police sources said that Israeli undercover soldiers killed Gabber Akhras, 29, in a fierce shootout in an operation to arrest him.

The sources said that Akhras, from the southern Gaza Strip city of Rafah, was a militant commander of the Popular Resistance Committees (PRC), who had left Gaza and stayed in Bethlehem for the past few months.

Earlier, local Israeli newspaper Ha'aretz said on its website that the killed militant was a senior member of the al-Aqsa Martyrs Brigades, an armed wing of the Palestinian Fatah movement. There is no immediate word from the Israeli army on the incident.

Earlier in the day, a Palestinian security officer was killed and three civilians were injured in an Israeli shelling on the northern Gaza Strip.

Israel has stepped up military operations against the Palestinian militants since weekend as about 15 Palestinians have been killed in Israeli attacks.

Meanwhile, Israeli Acting Prime Minister Ehud Olmert, who is to head the next government, said in a statement released earlier on Sunday that the new Palestinian government led by the Islamic Resistance Movement (Hamas), which was sworn in late March, was a "hostile entity" and that Israel would formally cut all contacts with it.