It was the first such attack since the Hamas militant group came to power and the deadliest in 20 months.

The bomb came on the day that Israel’s new parliament was sworn in, providing the first test for Ehud Olmert, the acting Prime Minister, even before he has formed a ruling coalition.

The bomb went off at 1.40pm outside a falafel stand near Tel Aviv’s old bus station, the same spot that was targeted by a bomber in January. The area was packed with poor immigrant shoppers seeking holiday bargains. Scores of shoppers were injured.

The attack was claimed by Islamic Jihad, who screened a suicide video by Sami Salim Hamad, a 21-year-old university dropout from Jenin. In the video he dedicated his death to Palestinian prisoners in Israeli jails and gave a warning that “there are many other bombers on the way”.

A day earlier Ramadan Shallah, the exiled leader of Islamic Jihad, told an anti-Israel conference in Tehran that his armed faction was determined to send bombers into Israel.

“The non-stop crackdown against our resistance might limit this effort, but it’s not going to stop it,” he said.

Condemnations were swift. Israeli officials called on Hamas to halt attacks by other militant groups, which it has refused to do. Mr Olmert, speaking at the Knesset opening, said: “We will know how to respond in the way and manner required, and we will continue to act with all means at our disposal to thwart further such incidents.”

As he spoke, Israeli troops rolled into the West Bank city of Nablus and began carrying out arrests. Last night Israeli aircraft fired missiles at a metal workshop in Gaza City, causing some damage but no injuries, Palestinian officials said. The Israeli Army said that the strike had targeted a building used by the Popular Front for the Liberation of Palestine for constructing rockets to fire at Israel. At least 25 Palestinians have been killed and 45 wounded in Israeli attacks this month.

Hamas remained defiant over the Tel Aviv blast. “This operation is a natural consequence of continued Israeli aggression and escalation,” Sami Abu Zuhri, a spokesman, said. “The Israeli occupation bears the responsibility for this situation as a consequence of its crimes against our women and children, as well as the assassinations (and) arrests.”

Moussa Abu Marzouk, a Hamas leader living in exile, gave warning of further escalation, saying: “The Israeli side must feel what the Palestinian feels, and the Palestinian defends himself as much as he can.”

Yesterday’s was the third suicide bombing this year. In January 15 people were wounded in the first bus station blast, and on March 30 four Israelis were blown up by al-Aqsa Martyrs’ Brigades near Kedumim, a Jewish settlement in the occupied West Bank.

Hamas’s stark response to the latest attack is certain to harden Israeli and US determination to cripple the new Palestinian administration through financial pressure and possible sanctions against regimes and businesses that support it.

Explore World News

• Iraq News

• US & Americas News

• Europe News

• Middle East News

• Asia News

• Africa News

• Ireland News

Times Recommends

• Betancourt euphoria fades in media backlash
• Tablet 'casts doubt on resurrection of Jesus'
• S&M madam: Nazi claims are rubbish