Israeli troops have detained a member of the Palestinian parliament said to have close ties with a militant offshoot of the mainstream Fatah party.
Israeli has been sending raids into the West Bank and Gaza Strip
Jamal Tirawi was seized during a raid in the West Bank city of Nablus.
In the past year Israel has held dozens of sitting MPs from the militant winner of the 2006 elections, Hamas, but he is the first from the rival Fatah group.
Two Palestinian militants were killed in an air raid at Jabaliya refugee camp in Gaza, Palestinian sources said.
An Israeli military spokesman said "armed terrorists in the Jabaliya camp" had been hit in the air raid, but gave no more details.
Hamas said the men were members of its military faction.
Earlier on Tuesday, Israeli troops killed two other armed Hamas members as part of ongoing efforts to stem rocket attacks.
About 50 Palestinians, mostly militants, have been killed in nearly two weeks of Israeli air strikes on the crowded coastal strip.
Meanwhile, Palestinian militants have fired more than 230 rockets into Israel in the last two weeks, killing two Israelis.
Palestinian Authority President Mahmoud Abbas, of Fatah, said he would meet Israeli Prime Minister Ehud Olmert on 7 June, two months after their last meeting.
Hamas said Tuesday's raid into Gaza took place near the Sufa border crossing in the southern end of the strip.
Details of the raid were murky. Witnesses quoted by Associated Press said Israeli forces searched three houses and arrested two brothers with ties to Hamas. A gun battle erupted, and two militants were killed.
It is the second time in the latest round of fighting that Israeli forces entered Gaza, from which Israel withdrew troops and settlers in the summer of 2005.
Troops searched the family home in Nablus before detaining Tirawi
On Tuesday, Mr Abbas proposed a new truce between militants and Israel as he announced the meeting with Mr Olmert.
But in a speech to Israel's parliament, Mr Olmert said he had "no intention of reaching any kind of settlement, neither with Hamas nor with Islamic Jihad. We will hit them and continue to hit them."
Detained Fatah MP Mr Tirawi is the party's spokesman in the Palestinian parliament.
Israel accuses him of ordering al-Aqsa Martyrs Brigades suicide bombers into Israeli cities, specifically an attack in a Tel Aviv cafe in 2002 in which one person was killed.
An Israeli military spokeswoman confirmed Mr Tirawi was taken into custody along with six other wanted militants.
A Fatah spokesman condemned the arrests and called on international help to make Israel "abandon its colonial mentality contradicting the principles of human rights and democracy".
In the last week, Israel has detained more than 30 Hamas officials in the West Bank, including two cabinet ministers.
Israel now holds more than a third of the members of the 132-seat Palestinian Legislative Council on security grounds.
They include 40 Hamas MPs, one from the Popular Front for the Liberation of Palestine, and four Fatah members, three of whom were elected while in jail.
The PLC - which holds TV-linked meetings in Gaza and the West Bank - can still take decisions if there is a quorum of half its members plus one at parliament meetings.