Israel's forces have taken over the West Bank town of Tulkarm, a day after four people were killed by a suicide bomb in an Israeli shopping centre.
About 20 Israeli military vehicles swept into Tulkarm
The Islamic Jihad militant group has said it was behind Tuesday's attack, which has upset a five-month truce.
A Palestinian policeman was killed in the raid on Tulkarm, which effectively returns a town ceded to Palestinians in March back to Israeli control.
Israel has also blocked entry to Gaza settlements before a planned pullout.
Non-residents have been stopped from entering the settlements to forestall protests from Israelis opposed to Prime Minister's Ariel Sharon's withdrawal plan, Israeli media reports say.
Tuesday's attack on the coastal town of Netanya was claimed by Palestinian militant group Islamic Jihad.
Mr Sharon ordered Israeli forces to strike at the group's leadership in Tulkarm.
"We will not stop until they [Islamic Jihad] stop the terrorist murders," he said.
Witnesses said about 20 military vehicles swept into the town before dawn. A Palestinian policeman was killed during the early morning raid, but the circumstances of his death are not confirmed.
Palestinian witnesses said the troops fired at a Palestinian security post in an unprovoked attack. Israeli military sources said troops shot back after two soldiers were wounded by fire from Palestinian gunmen.
Five suspected members of Islamic Jihad were seized during the raid.
The explosion in Netanya was the first suicide attack in Israel since Islamic Jihad attacked a Tel Aviv nightclub on 25 February, and follows four months of relative calm.
The bomber killed four women and injured about 30 other people at the entrance to a shopping complex in the town.
The bombing was the first in Israel for more than four months
Witnesses say the attacker tried to get inside the mall but was pushed away by security guards before blowing himself up.
Palestinian and Israeli sources identified him as Ahmed Abu Khalil, 18, from the nearby West Bank.
Israeli Police Minister Gideon Ezra said Palestinian leader Mahmoud Abbas must take action against the militants.
"His job now is to catch the people. He has the opportunity and the police, and to say 'I can't' is not an excuse," Mr Ezra told Israeli radio.
Mr Abbas has blamed the attack on "traitors" who were "working against the Palestinian interest".
Israeli authorities announced on Wednesday that entry to the Gaza settlements will be restricted to residents alone.
There are fears that protesters will enter the settlements and disrupt the withdrawal, scheduled for August.
The settlers' lobby group Yesha, which plans a demonstration against the withdrawal next week, attacked the government over the closure.
"This is the first time in history that a Jewish prime minister blockades Jewish communities and declares a part of Israel Jews-free," the organisation said.