Talks between Israeli and Palestinian security chiefs have been put on hold because of a suicide bombing that killed an Israeli doctor and injured 50 in Kfar Saba.
Further violence occurred early on Monday when Palestinians threw grenades at an Israeli army position on the Gaza border with Egypt and the Israelis responded with machine gun and tank fire.
Israeli tank shells also damaged buildings in the Rafah Palestinian refugee camp.
After a suicide bomber blew himself up at the crowded bus stop in Kfar Saba, city officials met with police commanders to discuss security measures, Israel radio reported.
It was the third bomb attack in nine days in the city, which is near the West Bank.
Israel's Prime Minister Ariel Sharon blamed Palestinian leader Yasser Arafat's administration for the bombing.
"The Palestinian Authority is not acting to foil terror attacks and continues its violent activities and incitement in an effort to reach its political goals," Mr Sharon was quoted as saying by his office.
Dismissing speculation that Mr Arafat was losing his grip over the Palestinian areas, Mr Sharon said Mr Arafat "has strategic control over what is happening."
Palestinian officials said the Palestinian Authority had nothing to do with the attack. Mr Sharon has ruled out peace negotiations while violence continues but has approved contacts to reduce tensions of nearly seven months of conflict.