A suicide bombing has killed four and injured about 30 outside a popular seafront night club in the Israeli city of Tel Aviv, police report.
The club was popular for weekend revellers
The attack is the first since Israeli and Palestinian leaders agreed earlier this month to end violence in pursuit of peace efforts.
Israel's government said the blast had shown Palestinian attempts to prevent militant attacks had failed.
The Palestinian authority has pledged to punish those behind the blast.
It condemned the attack, describing it as a bid to sabotage the peace process.
Mahmoud Abbas, its leader, called an emergency meeting of his security chiefs and reportedly asked for a joint investigation along with Israel.
US Secretary of State Condoleezza Rice called for the Palestinians to take "immediate, credible steps" to find those behind the attacks.
"We now must see actions that send a clear message that terror will not be tolerated," she said.
Village under curfew
There have been conflicting claims about who carried out the attack.
A Palestinian security official told the Associated Press news agency the bomber was a member of the al-Aqsa Martyrs' Brigade recruited by Lebanon-based Hezbollah militants - though a Hezbollah spokesman in Beirut has denied this.
The Israeli army has enforced a curfew and made several arrests in a West Bank village said to have been the bomber's home.
Palestinian security officials say the brothers of the alleged bomber as well as the local priest had been detained in Deir al-Ghusun, north of the town of Tulkarm.
The bomber set off a device as people queued to get into the club, reportedly after security guards spotted him and kept him out.
The attack happened at the entrance to the Stage club on Herbert Samuel Street, close to the promenade, Tel Aviv police chief David Tsour said.
The bomber struck at a busy time for the club
"The impact, had he got inside, would have been tragic," he said.
An unnamed witness told Israel's Army Radio that they had heard a "huge explosion".
"The whole area of the club was destroyed. Debris fell to the ground and cars were smashed."
Israeli media report the blast occurred at 2315 (2115 GMT).
Alon Kotler, a paramedic who treated several of the wounded told the Israeli newspaper Haaretz that rescuers had found "young people lying on top of each other, most of them moderately to seriously wounded".
The type of wounds, he said, indicated that the suicide bomber had set off the bomb in the midst of the clubbers.
The Stage, usually very busy on a Friday night, had just opened its doors when the bomb went off, its manager told Channel 2 TV. Inside at the time, he heard a "large boom".
Clubs in the area have been attacked by Palestinian militants in the past, notably the Dolphinarium disco, where a bomber killed 21 in 2001.
Militant attacks fell away in the days after Israel and the Palestinian Authority reached a truce at a summit in Egypt on 8 February.
"The Palestinian Authority's attempt to reach arrangements for the prevention of terror have failed," Israeli government spokesman David Baker told Reuters news agency.
Palestinian negotiator Saeb Erekat condemned the attack.
"Whoever is behind it is seriously attempting to sabotage the efforts being exerted to revive the peace process and should not be allowed to succeed," he said.