A young Palestinian suicide bomber killed eight Israelis and wounded dozens more in an attack at a take-away restaurant in Tel Aviv today.

The horror of the blast was relayed to millions of Israeli television viewers watching the simultaneous swearing-in of Prime Minister Ehud Olmert's new government in the Knesset. News channels split their broadcasts to show the ceremony live on the left-hand of the screen, juxtaposed with panic and carnage on the right.

Officials from Hamas, the Islamic organisation which is now the Palestinian government, heightened the diplomatic damage by refusing to condemn the bombing, instead describing it as an act of self-defence. Mr Olmert said that Israel would respond "appropriately".

The bomber detonated a bag packed with explosives outside the Mayor's Falafel, a food stall in the down-at-heel Neve Shaanan district of Tel Aviv at 1.45pm (1045GMT). The area was busy with people enjoying time off work for the Jewish festival of Passover. Reports suggest that 49 people were wounded, several seriously.

Israel Yaakov, a witness, described how he watched a woman die next to her husband and children. He said: "The father was traumatised, he went into shock. He ran to the children to gather them up and the children were screaming, ’Mom! Mom!’ and she wasn’t answering, she was dead already ... it’s a shocking scene."

Live television pictures showed bystanders and casualties standing dazed with blood on their shirts. Some people were treated for their injuries on the street. Others were loaded on stretchers and into ambulances.

The owner of the Mayor's Falafel told reporters that he had taken on a doorman after the restaurant was bombed earlier this year. He said that the young man was asked to open his bag when he tried to enter the restaurant: "The guard begins opening the bag, and then I heard a boom," he said.

Both the Islamic Jihad militant group and the al-Aqsa Martyrs Brigade, which is linked to the Fatah movement of Palestinian President Mahmoud Abbas, have claimed responsibility for the blast.

Islamic Jihad later released a video showing a boy dressed in black wearing a headband decorated with Quranic verses in gold stitching, which it claimed was the bomber. The boy was named as Sami Hammad. His family - who identified their missing son from the footage - told AP that the boy was a 21-year-old university drop-out from the West Bank. Other reports suggested that he 16, perhaps younger.

On the video, the boy is draped in the regalia of Islamic Jihad and clutching a rifle. Looking into the camera in the farewell message, he states: "There are many other bombers on the way."

The boy's mother Samiya, from the village of Arakeh near the town of Jenin, said that Sami had left home several days earlier.

She said that he had studied social work through a distance-learning program of Al Quds University, but was forced to drop out because the family did not have enough money to support him. She said he took a series of odd-jobs, including working at a restaurant, adding that there had been no indication he had become involved with militants.

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