Israeli army tanks, armored cars and bulldozers have moved more than 2km into the Gaza Strip, the largest incursion into the territory since the Hamas movement took full control in June.

At least four members of Islamic Jihad were killed on Tuesday, three by a tank shell near Khan Yunis and the fourth by an Israeli missile near Beit Hanoun.

However, an Israeli military spokeswoman sought to play down the offensive near the town of Rafah saying it was a routine operation "against the terror infrastructure" in Gaza.

Israel frequently attacks armed groups in Gaza in response to the firing of rockets and mortars.

The raid came the day before Mahmoud Abbas, Palestinian president, Ehud Olmert, the Israeli prime minister, were due to hold their first talks since the long-stalled peace process was relaunched at a conference in Annapolis, Maryland last month.

George Bush, US president, has said that he wants an agreement on Palestinian statehood by the end of 2008, but big gaps remain on key issues and further clashes could complicate talks.

There is already a doubt over whether a settlement can be reached while control of the two Palestinian territories is effectively split between Hamas in Gaza and the Fatah faction of Abbas in the West Bank.

Palestinians detained

Witnesses said that Israeli troops cut traffic on Gaza's main north-south road and exchanged fire with Palestinian fighters.

Soldiers took over the rooftops of several homes and detained about 60 people in house-to-house raids, residents said.

The Israeli military said they were detained for questioning.

Two soldiers were lightly wounded in Tuesday's clashes, according to the Israeli military.

Palestinian fighters could be seen carrying land mines and other weapons through the streets as schoolchildren were let out of school early so they could take refuge in their homes.

In the major West Bank city of Nablus, a Palestinian fighter died when an explosive he was planning to use against Israeli troops detonated accidentally, local residents said.

The spokeswoman said Israeli troops had made two arrests during a raid in Nablus and that the fighter died while he was preparing a bomb.

Hospital officials identified the dead man as a member of the al-Aqsa Martyrs' Brigades, an offshoot of the Fatah movement.

'Historic path'

The violence came a day after Olmert pledged to "forge a historic path" towards a final accord with the Palestinians in the first formal peace talks in seven years.

He warned that if Israel tries to maintain control over Palestinian territories, its future as a Jewish state is in jeopardy.

Olmert told a business conference on Monday that the stakes are high for Israel.

Answering critics who reject concessions to the Palestinians, Olmert said creation of a Palestinian state next to Israel is vital.

PHOTO CAPTION

Israeli tanks in Gaza strip