Ehud Olmert today blamed the artillery shelling which killed 18 Palestinian civilians in the Gaza Strip yesterday on a "technical error" and called for an urgent meeting with Mahmoud Abbas, the Palestinian President, to whom he pledged to "offer a lot".

The Israeli Prime Minister offered the olive branch as thousands of Palestinians filled the streets of Beit Hanoun, the northern Gaza town where the attack happened, to bury the dead, most of whom were from one extended family.

With the bodies of two babies carried aloft by their fathers, mourners cried out anti-Israel chants and militants vowed to avenge the deaths.

Speaking at a business conference in Tel Aviv, Mr Olmert expressed regret for the bloodshed of civilians, saying that he was "very distressed" by the incident and had personally looked into the cause of the strike. "This particular case ... was a mistake. It was not a planned attack," he said. "It was a technical failure of the Israeli artillery. I checked it and I verified it."

But he added that Israel would continue operations in Gaza as long as rocket attacks by Palestinian fighters persisted and cautioned that further mistakes were possible even though Israel would do "everything we can" to avoid similar errors.

"It may happen," he warned, adding that yesterday’s pre-dawn strike was aimed at an orange grove used by militants in northern Gaza to fire rockets into Israel.

The fatalities occurred after Israeli troops fired artillery in Beit Hanoun, with a flurry of shells hitting a compound of apartment buildings and sending panicked residents scurrying outside, some to their deaths. An Israeli army commander blamed the tragedy on a malfunctioning deviced used to aim the artillery.

The strike - the deadliest on Palestinian civilians in the past six years of fighting – provoked threats of a new wave of violence and undermined efforts by Mr Abbas to renew peace talks with Israel. Mr Abbas has condemned the killings and called for UN intervention.

The victims, most from one extended family – the Athamnas – were wrapped in the yellow flags of Mr Abbas’s moderate Fatah party. But many fear the deaths and the high emotions provoked by the shelling will lead Hamas and other militant groups to revive suicide bombings.

With the bodies of two dead babies held aloft, the mourners in Beit Hanoun marched from the shrapnel-scarred family home to the cemetery. Women wailed: "The whole world is doing nothing". Others chanted the habitual Palestinian cry of aspiration and defiance: "Martyrs by the million: we are going to Jerusalem."

As the body of 1-year-old Maysa Athamna was carried past one local man, Kamal Hamdan, said: "It’s tearing our hearts away. What guilt has this baby committed?"

"We should have peace. They should negotiate."

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