Israeli tanks surged into the Palestinian-ruled village of Beit Jala near Jerusalem and the Rafah refugee camp in the GazaStrip early on Tuesday in what the army said were reprisal raids for earlier attacks.
The army sent in the tanks, bulldozers and armored vehicles a day after assassinating Abu Ali Mustafa, a radical Palestinian leader it accused of masterminding bomb attacks, in a missile attack which prompted criticism by the United States.
Witnesses said at least four tanks armed with heavy machineguns and several armored vehicles entered Beit Jala under cover of darkness after heavy shooting from the village at the nearby Jewish settlement of Gilo.
There was sporadic shooting as the tanks rolled into Beit Jala close to the West Bank town of Bethlehem, the traditional birthplace of Jesus. Some people waved the V-for-victory sign as the tanks went past.
Gunmen have often fired from Beit Jala during the 11-month-old Palestinian revolt against Israeli occupation and the Israeli army had warned the Palestinians it would not tolerate continued shooting at Gilo.
There was no immediate word of casualties in the village.
The army said in a statement that the present operation would be limited, and was in response to Monday's shooting on Gilo in which one Israeli was wounded, and Palestinian sniper fire at Israeli drivers on a stretch of West Bank road.
Witnesses said two bulldozers and the tanks pushed some 70 to 80 yards into Rafah camp in the southern Gaza Strip.
At least eight people were wounded in a fierce gunfight and at least 10 buildings were destroyed before the army started to withdraw about two hours later, they said. Residents of the area fled their houses.
Hospital officials said eight people were hurt and witnesses said at least seven houses were destroyed. The army had earlier accused Palestinians in the area of throwing grenades at troops near Rafah.
Israel radio reported that forces also entered the Palestinian village of Beit Sahour near Beit Jala but the report could not be confirmed.