The commander of Israeli military intelligence warned Tuesday that Palestinian militants will try to stage a large-scale attack on Israel's 60th anniversary celebrations next month.
"There are attempts to carry out a 'quality' attack of either kidnapping Israeli civilians or a major bombing" during the celebrations, Maj. Gen. Amos Yadlin was quoted as saying in a text released by the prime minister's office.
Speaking at closed Cabinet session, Yadlin compared the potential attack to the suicide bombing on a Jewish holiday in 2002 that killed 30 people in a hotel on Israel's coast.
Israel is expected to impose strict security measures, including a ban on Palestinians entering the country, around the time of Israel's Independence Day on May 8. President Bush is among the VIPs expected to attend the festivities.
Palestinians mark the occasion as a day of mourning, because about 700,000 Palestinians fled their homes or were driven out during the two-year war that followed Israel's creation in 1948.
Yadlin spoke as Israel and the Palestinians traded charges over who was to blame for the death of a mother and her four children in an explosion Monday at their house during a clash in the Gaza Strip.
Before the Cabinet's closed meeting, Israeli Prime Minister Ehud Olmert made a public statement expressing regret over the deaths.
But he blamed Gaza's Hamas rulers, saying they allow militants to operate within residential areas and make "the civilian population in Gaza into an indivisible part of its war."
The fighting erupted after Israeli soldiers entered the town of Beit Hanoun in pursuit of gunmen who approached a border patrol, Israel said.
Palestinian officials and relatives on Monday blamed the blast on an Israeli tank shell. But the Palestinian Center for Human Rights said Tuesday it was caused by an air-fired Israeli missile aimed at a militant about 30 feet from the home. The group gathers its information from witness accounts.
The Israeli human rights group B'Tselem demanded the military release video from the aircraft that fired missiles in Beit Hanoun, so ballistics experts could determine whether there was a secondary blast caused by militants' explosives, as Israeli officials claim.
A military commission headed by a colonel is expected to report Wednesday on its investigation of the incident.
Egypt has been trying for weeks to arrange a cease-fire between Israel and Gaza militant groups.
Last week, Hamas said it would accept a six-month cease-fire with Israel, provided Israel ends the economic blockade it imposed on Gaza after Hamas violently wrested control of the coastal territory last June. The blockade has caused shortages of fuel, cement and other basic items and has deepened unemployment in the impoverished territory.
As several human rights groups called Tuesday for Israel to relax its restrictions on fuel shipments to Gaza, Yadlin blamed Hamas for the fuel shortage, telling the Israeli Cabinet that the Islamic militant group "is exploiting the situation to give the illusion of a crisis."
Israeli Defense Minister Ehud Barak scoffed at talk of truce efforts.
"I think now we're in a showdown with Hamas," Barak told reporters. "That's a more apt description than a possible cease-fire."
While clashing with militants in Gaza, Israel is engaged in peace talks with Hamas' chief rival, Palestinian President Mahmoud Abbas, who government is based in the West Bank.
In August, Israel offered to stop hunting dozens of West Bank militants linked to Abbas if they agreed to halt violent activities. Six months later, a senior Israeli security official said the amnesty program has been a success.
Militants seeking amnesty are required to surrender their weapons, serve a brief sentence in a Palestinian jail and pass a probationary term.
According to the official, 281 gunmen have accepted the offer, and just six have returned to violence. The official's identity could not be revealed under Israel's security guidelines.