A Hamas militant was killed and four Israeli soldiers wounded in a suicide car bombing on a Gaza Strip settlement Wednesday, while a leading Palestinian peace campaigner was briefly arrested in east Jerusalem.

Israeli military sources said a booby-trapped jeep painted the same colour as army vehicles and apparently on a mission to ram the Kfar Darom settlement exploded when troops opened fire on the vehicle.

Four soldiers travelling in a car just behind the jeep were wounded by the blast, two of them seriously, the sources added.

Militants from the Ezzedin al-Qassam Brigades – Hamas's armed wing – identified the dead attacker as Tareq Hmeid, 23, through loudspeakers in the nearby Nusseirat refugee camp.

Meanwhile here in Gaza City, four masked gunmen shot dead a Palestinian suspected of collaborating with Israel, medical sources and witnesses said.

The victim, who was not immediately identified, was gunned down in Gaza's eastern Al-Zeitun quarter.

No one claimed responsibility for the killing of the man, who local residents said was a suspected collaborator.

A spokesman for the Al-Aqsa Martyrs Brigades, an armed offshoot of Palestinian leader YASSER ARAFAT'S Fatah group that has killed a number of such people, condemned the murder.

The fresh violence comes amid fears in the Israeli defence establishment that Palestinian militants will step up attacks in the Gaza Strip in a bid to be seen as driving the army out.

Israeli Prime Minister Ariel Sharon has proposed a raft of unilateral measures to "disengage" from the Palestinians, including withdrawing from most of the Gaza Strip in 2005.

But the dismantling of all 21 Jewish settlements in the territory and the evacuation of its estimated 7,500 residents has been met with fierce opposition by some leading members of Israel's ruling coalition.

Tens of thousands of settlers and right-wing nationalists marked the 56th anniversary of Israel's creation Tuesday by flocking to the Gaza Strip's Gush Katif settlement bloc to protest against Sharon's plan.

A cabinet minister and several majority MPs addressed the crowd and called on members of Sharon's Likud party to vote against the plan when it is submitted to them by a referendum on Sunday.

Sharon lacks the support of a clear majority within his own party, and the latest show of force by the pro-settler forces spurred his camp into stepping up its campaign in favour of the withdrawal.

The government's number two, Trade Minister Ehud Olmert, told public radio that a Gaza withdrawal would eventually mean no more Palestinian workers from the territory would be allowed to cross into the Jewish state and improve state security.

"Of course, this does not mean we will completely isolate the Gaza Strip from the outside world, nor starve its residents, but our pullout from this area will guarantee us a better security situation," he said.

Israeli military sources also said a deep four-kilometre-long (2.5-mile) trench would be built along the border between the southern Gaza Strip and Egypt before troops complete the pull-out.

The trench will be aimed at preventing radical Palestinian groups from stockpiling weapons smuggled from Egypt through cross-border tunnels after an Israeli withdrawal, the sources said.

Meanwhile, Israeli border guards briefly arrested leading Palestinian dove Sari Nusseibeh Wednesday morning in occupied and annexed east Jerusalem for allegedly employing illegal workers.

"I was released after committing myself to paying a fine of 10,000 shekels (2,200 dollars) if I don't show up at a possible trial," Nusseibeh told

AFP after his four-hour questioning.

He said he was questioned about Palestinians from the West Bank without Israeli entry permits employed at the university, and stressed the incident had no political undertones.

Nusseibeh, a well-known intellectual from a leading Jerusalem family, co-launched a peace plan in July 2002 together with Ami Ayalon, the former chief of Israel's Shin Beth domestic security service.AFP