One of the most prominent leaders of the Palestinian militant group Hamas, Abdel-Aziz al-Rantissi, has been wounded in an Israeli helicopter strike in Gaza City.
More than one missile is said to have hit the vehicle
Mr Rantissi's jeep was driving through a busy street when it was hit by several missiles and burst into flames, witnesses said.
Mr Rantissi leapt clear of the vehicle seconds before the missiles hit, and was lightly wounded.
At least two Palestinians were killed and another 25 people - including Mr Rantissi's son - were injured, medical sources at Gaza City's Shifa Hospital said.
Hours after the attack, the Israeli army issued a statement saying that the Hamas leadership had "taken the strategic decision to scuttle
the implementation of the roadmap" - the US-backed plan for peace between Israel and the Palestinians.
But US President George Bush said he was concerned that the attack on Mr Rantissi would itself put the roadmap in jeopardy.
"He is concerned this strike will undermine efforts to bring an end to terrorist attacks," said a statement from the White House. "It is important in this new environment for Israelis and Palestinians to work together on the path to peace".
Call for revenge
The BBC's correspondent in Gaza City, James Rodgers, was close to the scene when the helicopters fired their missiles.
He said a series of loud explosions rocked the area, then white and dark brown smoke began rising from the refugee camp at the edge of the city.
Speaking from his hospital bed, Mr Rantissi vowed revenge, saying Hamas would continue the fight against Israel until every last "Zionist" was gone.
"We will maintain our jihad (holy war) and resistance until we kick out every single criminal Zionist from our land," he told the pan-Arab broadcaster al-Jazeera by telephone.
Palestinian Prime Minister Mahmoud Abbas, also known as Abu Mazen, described the action as a "terrorist attack", which could derail peace efforts.
The attack came two days after four Israeli soldiers were killed in an attack in Gaza involving Hamas militants.
The group broke off ceasefire talks with Abu Mazen at the end of last week after he called for an end to attacks on Israelis, although it said it was considering resuming contacts.
There is speculation that the attack on the Hamas leader may be designed to illustrate that Israeli Prime Minister Ariel Sharon's resolve to crack down on militants has not weakened.
Mr Sharon has come under fire from members of his own right-wing party for making concessions to the Palestinians - including agreeing to dismantle of several, mainly uninhabited, Jewish outposts in the West Bank.
Israel has removed about 10 of 15 unauthorised outposts slated by the government to be taken down in compliance with the roadmap.
The move has met massive resistance from Jewish settlers, who have pledged to thwart attempts to remove them from land claimed by the Palestinians.