Two Israelis and five foreigners, including three US citizens, were killed when Palestinian militants detonated a bomb in a crowded cafeteria at Jerusalem's Hebrew University.

More than 80 people were hurt in the Wednesday lunchtime attack. The Islamic militant group Hamas said it carried out the bombing in revenge for an Israeli air strike in the Gaza Strip last week, which killed its military commander and 14 others, including nine children.

In a rare divergence from Hamas' usual tactic, the attack seemed not to have been a suicide bombing and hit an unusual target because it is one of few places where Arabs and Israelis get on together. Police said the bomb was probably left in a bag.

"There was a boom, everything went up in the air," Lee Seung Jae, a Korean student, said.

The cafeteria's windows were blown out and a thick cloud of smoke and the stench of charred human flesh met medics who rushed to the scene.

The US State Department said three Americans were among those killed in the blast, which was swiftly condemned by international leaders.

Medical sources said the dead included two Israelis. The other victims' nationalities were not announced, but the medical sources said at least one was from a European country.

The bomb exploded in the cafeteria in the Frank Sinatra International Students Centre, on the university's Mount Scopus campus near Arab East Jerusalem.

In Gaza City, thousands of Palestinian men, women and children celebrated by clapping, singing and distributing sweets. Many demanded more attacks to avenge last week's killing of Salah Shehada, commander of Hamas's military wing.

The student centre – named after the late American singer Frank Sinatra, a financial donor - was a popular gathering place hailed by students as an example of ethnic and racial harmony despite nearly two years of Israeli-Palestinian violence.

More than 1,472 Palestinians and 573 Israelis have been killed in violence, including a three-year-old Palestinian girl who died of wounds received just over a week ago in Gaza City. Reuters