Palestinian PM Salam Fayyad has criticised Israel for a large-scale military incursion in the centre of Nablus, the West Bank's largest city.
The Israelis raid is one of the biggest in Nablus recently
Mr Fayyad said the ongoing raids were harming a Western-backed Palestinian security plan.
Hundreds of Israeli troops entered Nablus on Thursday, carrying out house-to-house searches and arrests.
In clashes that followed between Palestinian protesters and soldiers, about 30 people were injured.
The West Bank is run by the Palestinian Authority dominated by the Fatah faction of Palestinian leader Mahmoud Abbas.
He appointed Mr Fayyad as prime minister of an interim government in June, when the militant Hamas movement drove forces loyal to Mr Abbas out of the Gaza Strip.
Israel's army said it used rubber bullets and tear gas on the crowds of protesters, and denied reports that live ammunition was fired.
An Israeli curfew in Nablus imposed on Thursday has been widened, leaving shops, mosques and schools closed.
An Israeli army spokesman told the BBC the operation was aimed at dismantling terrorist infrastructure and arresting wanted militants.
He said Nablus was well-known as what he called the "terror core of the West Bank".
The military operation in Nablus is the biggest since hundreds of specialist Palestinian police deployed there.
BBC Jerusalem correspondent Katya Adler says the Palestinian Authority hoped the deployment would show Israel and the international community that it could rein in militants.
Mr Fayyad said Israel's actions would have a huge negative impact.
"These operations destroy our efforts in the field of security, which started bearing fruits lately in a way that people felt the change," he said.
Our correspondent says his rebuke intensifies the mood of mutual recriminations between Israel and the Palestinians ahead of President George W Bush's first visit to the region.
Mr Bush says he aims to keep up the pressure on both sides in the hope of reaching a peace deal by the end of the year.