Smash hit

Two Israeli soldiers and two Palestinians were killed in yesterday's raid, which used a secret tunnel bored from inside Gaza to 300m (980ft) beyond the Israeli fence that seals off the Palestinian strip.

The Israeli Government said that it held the Hamas-led Government responsible for the raid - the first such attack since Israel withdrew from Gaza last summer.

With evident trepidation, the Hamas-led government today said it knew nothing of the operation in advance – insisting it was carried out by the faction military wing Izz al-Din al-Qassam Brigade.

Challenged on the distinction between the party's political and military wings, Ghazi Hamad, the government's spokesman, said: "Here the situation is full of contradictions. It is abnormal.

"We cannot say Gaza is free and we have an independent state. Gaza is surrounded by Israeli troops. Daily in Gaza there are massacres and murders and assassinations so it is not easy to tell people you have to be patient and polite. You expect a kind of reaction sometimes."

While calling on the militant factions not to harm the soldier, he also complained at international double standards. "When they kill a family on a beach it was a terrible thing, but really no one moves to criticise Israel or impose sanctions, so people here feel anger with Israel and they want to retaliate."

He denied that this implied Hamas was not in control of its own militants. But Mr Hamad’s attempt to make subtle distinctions between militants and politics cut little ice with Israel.

Mr Olmert issued a thinly veiled threat against the Palestinian Authority, making no distinction between the new Hamas-led Government and President Mahmoud Abbas. "We in Israel view the Palestinian Authority, eaded by Chairman Abu Mazen [Mr Abbas] and the Palestinian Government, responsible for this incident, with all that implies," Mr Olmert said.

Shalit, from Mitzpe Hila, is the first Israeli soldier to be kidnapped since 20-year-old Corporal Nachshon Wachsman was snatched by Hamas in October 1994 north of Jerusalem. He was killed in a raid mounted to free him.

Brigadier-General Aviv Kochavi, head of the Gaza Division, described yesterday's apparently well-planned Palestinian assault as a "complex" operation. "They divided into three cells. One attacked an armoured personnel carrier. The APC was empty. Another group attacked a tank with grenades . . . causing two deaths and one serious injury," he said.

The raid was claimed as a joint operation by the People’s Resistance Committees (PRC), the previously unknown Army of Islam — thought to be a PRC splinter group — and Hamas’s armed wing. They said that it as retaliation for Israel’s assassination on June 8 of Jamal Abu Samadhana, the PRC leader, and the deaths of seven members of a single family on a Gaza beach during Israeli shelling. Israel denies responsibility for the beach deaths.

There was widespread support in Gaza yesterday for the raid on Kerem Shalom. Even in Rafahh, from where the tunnel was dug, families have sent away children and prepared their identity documents for evacuation ahead of the widely-expected Israeli counter strike.

But as they sat uneasily outside front doors keeping a careful eye on Israeli tanks across the border one mile away they said Gaza had suffered so many Israeli rocket attacks killing civilians and militants alike in recent weeks that it had nothing to lose.

"We were under Israeli threat any time, from their rocket and from their shelling," Ahmed Attiyah, 50, whose house over looks Kerem Shalom. "We were not very safe, we had no safety so why not retaliate?"

Ali Issa, 43, a farmer, was satisfied that the tunnel raid and kidnap were worth the trouble they would bring. "I am unhappy because Israeli reaction will be tough, but I’m happy because of the retaliation for the blood of our people," he said. "We are used to the Israeli reaction, it is worth it."

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