Israeli Communications Minister Binyamin Ben Eliezer has said Israel must "hermetically close off the territories, even for months".
The most serious attack inside Israel since the start of the Palestinian uprising has prompted a closure of Palestinian-ruled areas, but there have been calls for more drastic action to stop the violence.
The killing of at least eight Israelis by a Palestinian bus driver near Tel Aviv on Wednesday again highlighted Israel's vulnerability to attack.
Caretaker Prime Minister Ehud Barak's failure to rein in the violence that has raged since September was a key factor in his election defeat.
His successor, Ariel Sharon, has promised to restore security to Israel but now faces a tough test - how to tackle an escalation of Palestinian violence.
So far the Israeli authorities have responded by closing Palestinian Authority international crossings and warning of "additional steps".
Blockade
Some senior Israeli Government figures are urging specific measures.
Israeli Communications Minister Binyamin Ben Eliezer has said Israel must "hermetically close off the territories, even for months".
And Deputy Defence Minister Ephraim Sneh has called for a "total blockade" of the Palestinian-ruled areas, saying Israel is "at war" with militant groups including Islamic Jihad, Hamas and Hezbollah.
Mr Sneh has argued that Israel needs a "more efficient" security policy, instead of responding to each incident with another attack "as if it's a game of ping-pong".
But the bus attack - like a car bomb explosion in West Jerusalem last week - highlights not only how difficult it is for any Israeli leader to ensure security inside Israel, but also the challenge of protecting the widely scattered Jewish settlements in the West Bank and Gaza Strip.
Some elements within the army are pressing for more proactive policies, to initiate actions such as hot pursuit in the Palestinian-ruled areas and targeting of individuals, according to Mark Heller, a security expert at Tel Aviv University.
Mr Barak's cabinet has struggled to find new ways to end the violence that has claimed nearly 400 lives - most of them Palestinians - since the uprising began.
He and other Israeli officials have spoken of total separation as an option if a peace deal cannot be reached - permanently sealing off the Palestinian-controlled areas.
Separation
Mr Barak has earmarked nearly $25m to erect a fortified electric fence along the line dividing Israel from the mainly Palestinian-populated West Bank.
The Israelis say the 70km (45 mile) long fence will not constitute a political border but only a security barrier - to keep out suicide bombers and to funnel all goods traffic through legal checkpoints.
The alarmed fence is intended to run along the June 1967 ceasefire line between Israel and the West Bank.
But Mr Heller says a total separation plan is not realistic because of the vulnerability of the scattered West Bank settlements.
Israel's plans for a total separation are said to include the following:
Vital workforce
Thousands of Palestinians normally travel to work every day in Israel - although the Israeli blockade has largely prevented them doing so since the Palestinian uprising erupted.
The blockade has paralysed the fledgling Palestinian economy - heavily dependent on Israel - and Gaza is virtually sealed off from the outside world. But it has also created gaps in the Israeli workforce.
Israel faces the additional security problem of militants among its own Arab minority, forming about 20% of its population. Israeli Arabs boycotted the prime ministerial election in protest at Israel's security crackdown.
And some Israeli Arabs have joined the uprising, engaging in violence after decades of relatively peaceful coexistence with their Jewish neighbours.