Israeli forces have made some arrests in the West Bank after raiding the two cities of Jenin and Nablus on the hunt for Palestinian militants.
Israeli troops were looking for wanted Palestinian militants
The arrests came hours after Israeli Prime Minister Ariel Sharon approved a series of military strikes against Hamas and Islamic Jihad - the militant groups that both claimed responsibility for Tuesday's suicide bus bombing in Jerusalem, in which 20 people died.
The BBC's James Reynolds in Jerusalem says the Israelis have now moved out of Jenin - although they remain on the outskirts - but have stayed in Nablus. They are reported to have arrested between half a dozen and a dozen Palestinians.
Overnight, Israeli forces demolished the suicide bomber's house in the West Bank city of Hebron, and the home of another militant near Jenin - a standard retaliation aimed at deterring others.
The Hebron family had moved out of the house, expecting the demolition.
Israeli sources and officials say they are giving the Palestinians another 72 hours to see evidence of a crackdown on Islamic militants in Gaza, our correspondent said.
The Palestinian Prime Minister, Mahmoud Abbas, has ordered the Palestinian security forces to arrest those who carried out the bombing.
Raed Mesk is thought to have carried out the Jerusalem bombing
The Israeli Government has warned the Palestinian Authority (PA) there can be no progress towards peace without action against the militants.
In a statement, the Israeli cabinet said any action taken by Israeli forces against militant organisations was meant not to hinder the peace process. The overnight raids were the first ones carried out since a ceasefire was agreed in June.
Late on Wednesday, a 16-year-old Palestinian was shot dead and five people wounded in an Israeli raid on a refugee camp in Tulkarm, also in the West Bank, witnesses said.
In late-night talks, Palestinian leaders reiterated their support for the three-month-old ceasefire and vowed to enforce the law.
Their statement came after talks in the West Bank city of Ramallah involving Palestinian leader Yasser Arafat and his Fatah movement, Abu Mazen and his cabinet, and other political groups.
"Everyone should adhere to one authority and the rule of law," they said in a statement following the meeting.
"The security forces will be in charge of implementing the resolutions of the Palestinian cabinet."
The PA has broken off contact with Hamas and Islamic Jihad.
The BBC's Chris Morris in Ramallah says it is not clear how the Palestinian security forces will carry out any arrests, as they only control small parts of the West Bank and Gaza.
Islamic groups say they remain committed to the peace plan known as the roadmap, even if it no longer means much.
"Really I think the roadmap was stabbed to death from the beginning," Hamas leader Abdel Aziz Rantisi told the BBC.
"We hear about the roadmap, but really on the ground Sharon is doing something else. As long as there is Israeli aggression there will be reactions. But we are still committed to the roadmap."
According to Israeli radio reports, police earlier arrested 17 Palestinians, suspected of being Hamas activists, including several relatives of Tuesday's bomber.
Israel has cut off all contacts with the PA, suspended talks on the handover of several West Bank towns to Palestinian control and re-imposed a total military closure in the West Bank following the attack.
The United States has repeated calls for the PA to dismantle extremist groups.
US President George W Bush - who on Wednesday telephoned Mr Sharon from his Texas ranch - remains committed to the latest initiative to bring peace to the Middle East, a White House spokesman said.
The US has sent its senior diplomat John Wolf to the region for talks with Israeli and Palestinian officials in an attempt to salvage the US-backed peace plan - known as the roadmap.