Israel's decision to send troops into Beit Jala is one of a growing number of Israeli incursions into areas under Palestinian control.
The Israeli army also occupied Palestinian territory around the town of Rafah in the Gaza Strip.
The first incursion into an area under full Palestinian control occurred in mid-August when Israel sent tanks to occupy the West Bank city of Jenin.
The move was unprecedented since parts of the West Bank and Gaza Strip were handed over to Palestinian rule under a peace deal in 1994 and provoked sharp international criticism.
Israel's closest ally, the United States, has said Israel needs to understand that such incursions only make matters worse.
Although Israel has frequently attacked Palestinian towns using helicopter gunships or shelled Palestinian positions from within Israeli territory, until recently it had rarely sent tanks into Palestinian territory.
It says its actions are to stop and deter Palestinians from using the areas as safe havens from which to launch attacks against Israel.
'Reinvasion'
Although Israel withdrew its troops after a few hours, it demonstrated that Israel was prepared to go back into territory, known as Area A, from which it had withdrawn under the Oslo peace accords.
The Palestinians said Israel's actions violated the peace deal and amounted to a reinvasion, while Israel said the operation was in self-defence after nearby Jewish settlements had come under fire from Palestinian gunmen.
Israeli Prime Minister Ariel Sharon said: "All those who carry out terrorist actions, help them or support them, must know they cannot live in peace even if they are in Area A."
The heaviest Israeli incursion into Palestinian territory since the start of the current uprising took place shortly afterwards, when troops went into Beit Hanoun in the Gaza Strip three times in four days.
The United States called the action "excessive and disproportionate".
Israel said it was in response to a Palestinian mortar attack on the Jewish settlement of Sderot - the deepest attack on a Jewish target within Israel since the start of the intifada.
Clearances
Incursions by the Israeli army into Palestinian territory have taken place at night under the cover of darkness.
The Palestinians, however, say civilians have also been victims, such as when, they claim, Israeli tanks and armoured bulldozers crossed into the Palestinian neighbourhood of Rafah in the Gaza Strip at one o'clock in the morning one night in July.
Palestinians say Israel demolished buildings housing 25 families.
Israel says it carried out a "clearance operation" because Palestinian militants were using the area to fire grenades at its security posts along the border.
Despite incurring international criticism when it mounts military action in Palestinian territory, Israel says it will continue to do whatever it deems necessary to protect the lives of its citizens.