"This is only the beginning," a senior Israeli security source said on Friday, a day after a helicopter missile strike that killed Hamas leader Ismail Abu Shanab and two bodyguards in the Gaza Strip.

"We plan serious retaliation on the terrorist infrastructure," he said.

Israel hit Hamas hard after one of its suicide bombers killed 20 people aboard a Jerusalem bus on Tuesday.

Hamas called the bombing a one-off revenge attack for Israel's killing of its leaders, saying it did not affect the June 29 unilateral truce.

But after the death of Abu Shanab, considered second in Hamas only to spiritual leader Sheikh Ahmed Yassin, militant groups vowed to unleash violence anew in a revolt that erupted in the occupied West Bank and Gaza Strip in September 2000. "We urge all our cells of fighters in Palestine to strike in every corner of the Jewish state," said a statement by Hamas, which like kindred group Islamic Jihad is sworn to Israel's destruction.

Reformist Palestinian Prime Minister Mahmoud Abbas had sought to curb violence through negotiations, rather than directly confronting Islamic militants, for fear of a sparking a Palestinian civil war.

He broke off communication with Hamas and Islamic Jihad after Tuesday's bus bombing and pledged the crackdown on militants called for in the U.S.-backed "road map" to peace which aimed at a Palestinian state by 2005.

Abbas denounced the midday missile strike on Abu Shanab's car in Gaza City as "an ugly crime." Fourteen bystanders were also wounded.

Hamas lobbed more than a dozen mortar bombs at Jewish settlements in Gaza and at least two of its makeshift Qassam rockets hit homes in Sderot, a town in southern Israel, military sources said on Friday. There were no reports of casualties.

Israeli forces have flooded Hebron -- the home town of Tuesday's bomber -- and other West Bank militant bastions, conducting searches for weapons and roundups. The army said 15 suspects were arrested on Friday.

The Gaza Strip, which is densely populated and fenced-off from Israel, has not been subject to broad ground operations. That could now change, the Israeli security source said.

"We are not ruling out major action in Gaza," he said. He named Rafah, a town straddling the Gaza-Egypt border and favored by Palestinian gunrunners, as one likely target.

Faced with the prospect that the peace "road map" could fold under the weight of new violence, Secretary of State Colin Powell turned for help on Thursday to Yasser Arafat, the Palestinian president whom Washington has tried to sideline and a pariah to the Israelis.

AFP adds: The Palestinian militant groups Islamic Jihad and Hamas issued a joint statement Friday formally ending their seven-week-old truce because of an Israeli air strike that killed a top militant leader.

The statement blamed Israeli Prime Minister Ariel Sharon for wrecking the truce that the Palestinian militants declared unilaterally on June 29 and which Israel considered dead after a massive suicide bombing in Jerusalem Tuesday.

Hamas effectively called off the truce Thursday after Ismail Abu Shanab, one of its top officials, was killed with two bodyguards in a hail of rocketfire on his car in central Gaza. But Islamic Jihad waited until Friday.

"We announce together today that Sharon assassinated the truce and delivered the final blow in killing political leader Ismail Abu Shanab," the joint Hamas-Islamic Jihad statement said.

Tens of thousands of Palestinians were expected to jam the streets of Gaza for Abu Shanab's funeral Friday as anger mounted over the latest Israeli airstrike.

Nearly 20,000 Palestinians held impromptu rallies in various parts of Gaza Thursday crying for vengeance, and more were expected for a funeral likely to turn into an outpouring of grief and anger.