Israeli Arabs have long complained of persecution
The leader of Israel's Islamic Movement has been arrested along with 13 supporters on charges they funnelled millions of dollars to the militant Hamas organisation.
Police minister Tzahi Hanegbi alleged that the money sent to Hamas was collected by the Islamic Movement under the pretence of charity.
The arrests signalled a further downturn in relations between the Israeli government and the country's 1.2 million-strong Arab minority.
Israeli Arabs have long complained of systematic discrimination by the authorities, and tensions have been running especially high since police killed 13 Arabs in anti-government riots in October 2000.
The Islamic Movement is the largest Arab organisation in Israel.
It has split into a more pragmatic branch that participates in Israel's political life, and a more radical branch that has come out in support of Hamas, the Palestinian group operating in the West Bank and Gaza Strip that carries out suicide bombings as part of its campaign for a Palestinian state.
The Islamic Movement did not refer to the charges, but said the arrests were meant as intimidation.
Protests are planned after prayers on Friday, the group said.
Police said that the arrests capped a two-year investigation and were carried out early on Tuesday, on the Muslim holiday marking the birthday of Prophet Muhammad.
Israel's Arab minority
Stayed on their land after the creation of Israel
1.2 million, nearly one fifth of the Israeli population
Hold Israeli citizenship
Protests escalated over last 12 months
Hundreds of police and agents of the Shin Bet security service were involved in the raid in which the leader of the northern branch of the Movement, Sheik Raed Salah, and other members of the group were arrested.
The group said Salah was visiting his father in a hospital when he was picked up.
Most of the suspects were seized in Umm el-Fahm, an Arab town in northern Israel, whose mayor belongs to the Islamic Movement, Israeli radio said.
Several are members of Islamic charity organisations and the Al-Quds (Jerusalem) committee for the protection of Muslim holy sites, especially the Al-Aqsa Mosque compound in Jerusalem.
They were to be brought before a Tel Aviv court for a remand hearing.
Police want to keep them in custody until the end of the investigation.
Police minister Tzahi Hanegbi, said the suspects "have been working consistently for years to bring in massive amounts of money for activities that ... help terror".
He said it made little difference whether the money was used for buying explosives or was given to families of suicide bombers.
"Terror cannot exist without a financial infrastructure," he said.
Minister without portfolio Uzi Landau said no government in the past wanted to touch the issue "but today the atmosphere has changed".
But Israeli Arab MP Mohammad Barakeh protested against the arrests, which he described as "a media operation aimed at smearing Israeli Arabs" which would cause more communal tension.
A Hamas spokesman, Ismail Abu Shanab, said the Islamic Movement provided humanitarian help to Palestinians, and that it - Hamas - had no ties to the organisation.
He said the arrests were "a new escalation against Muslims and Arabs in occupied Palestine".
Since the current Palestinian uprising began in September 2000, Hamas and the smaller Islamic Jihad group have carried out 89 suicide bombings that have killed more than 300 Israelis.
Only one of the bombers was an Israeli Arab.
The 1.2-million-strong Israeli-Arab community accounts for 19 % of Israel's total population.
They are Palestinian Arabs who stayed on their land when the state of Israel was created in 1948, unlike those Palestinians who fled or were expelled from their homes.