Speaking in his Ramallah office, the official produced a fat wad of $100 notes which he said had been confiscated from a pro-Iranian Islamic Jihad activist.

The money was said to have gone from Iran to Damascus, the Syrian capital, from where Ibrahim Shehadeh, Islamic Jihad’s head of overseas operations, transferred it to the West Bank.

According to the intelligence official, the Palestinian Authority has located workshops where “Al-Quds” (Jerusalem) rockets are being made and has given their co-ordinates to the Israelis. “We understand they destroyed some of them,” he said.

The Israeli media claimed last week that rocket attacks from the West Bank were widely expected: Ben Gurion airport’s eastern runway is just five miles away and the outskirts of Tel Aviv are within 10 miles.

Shaul Mofaz, Israel’s defence minister, and the army’s chief of staff held an emergency meeting to discuss requests from the mayors of towns bordering the West Bank for sirens to alert inhabitants to incoming rockets.

Israeli intelligence officials said that Iran was threatening the country on three fronts: through long-range missiles based in Lebanon; through terrorist networks around the world; and through the new arsenals of the West Bank.

Islamic Jihad is the only Palestinian group that calls for the destruction of the state of Israel. Based in Damascus, it has an annual budget of several million dollars — provided by Iran. Ramadan Shalah, its leader, has a PhD in economics from Durham University. The organisation’s military arm is the “Al-Quds Brigades”.

Since the death of Yasser Arafat last year, Islamic Jihad has taken the lead in attacks against Israel. A suicide bombing that killed five people in the northern town of Hadera last week was revenge for the killing by Israeli special forces of Luay Saadi, the group’s leader in the West Bank.

This weekend Israeli forces launched an operation against the organisation in both the West Bank and Gaza — including the destruction of the rocket workshops.

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