Paul Royall: Binyamin Netanyahu is in defiant mood

Binyamin Netanyahu's ultimatum came after Friday's market bombing in east Jersusalem.

Speaking on Saturday, Mr Netanyahu told a meeting of supporters that the Palestinians were failing to deliver their part of the land for peace deal: "We are not ready for to take faked peace.

"The Palestinian Authority made an obligation to fight terror," he said. "Fight it and you will get land; don't fight it and you won't get land."

The blast injured many people

The Palestinians are insisting they are committed to cracking down on those threatening Israeli security - there are reports that members of Islamic Jihad were arrested in the West Bank on Saturday night.

The militant Palestinian group Islamic Jihad says it carried out Friday's attack at a Jerusalem market which killed two suicide bombers and injured more than 20 Israelis.

A leaflet, sent to newsagencies in Jerusalem in the name of Islamic Jihad on Saturday, said: "This heroic attack, which was not the first and will not be the last, was carried out ... to confront the great conspiracy that aims to liquidate the Palestinian cause through the Oslo and Wye Plantation agreements."

Ramadan Abdallah Shallah: "Yes, I confirm that... [the bombers] are martyrs of the Islamic Jihad Movement" (in Arabic)

And in an interview with the Arabic service of Radio Monte Carlo, Islamic Jihad's Secretary-General, Ramadan Abdallah Shallah, confirmed that the two bombers, both killed in the blast, had been "martyrs of the Islamic Jihad.

"They carried out Friday's attack in Jerusalem in response to the crimes of the Zionist enemy which is continuing its policy of settling and Judaising the occupied territories without interruption," Mr Shallah said.

Yusuf Muhammad Ali al-Sughayr - device went off prematurely

Palestinian dissident radio, Al-Quds, said that one of the perpetrators, 22-year-old Yusuf Muhammad Ali al-Sughayr, had been released three months before, following a two-year detention in "Zionist enemy jails" charged with belonging to the Islamic Jihad Movement.

The radio described the attack as an "heroic martyrdom operation".

Palestinian arrests

Palestinian forces moved against the militant Islamic Jihad group, arresting several activists, Palestinian officials said on Saturday.

Yasser Arafat's Palestinian Authority pledged to crack down on militants after the Friday attack, but said Israel should not use the incident to avoid implementing the Wye River accord.