"Hezbollah is coming," mourners chanted at Thursday's funeral of a Palestinian militant killed by Israel, his body wrapped in the flag of the Lebanese-based guerrilla group.

A Hezbollah flag, along with Hamas banners, also adorned the home of an Israeli Arab man who gunned down students at the Mercaz Harav yeshiva in Jerusalem last week, killing eight. A shadowy group Palestinian security officials say is a front for Hezbollah claimed responsibility for the rampage.

Hezbollah has long operated behind the scenes in the Palestinian territories, funneling millions of dollars to militant groups for attacks against Israel, according to Israeli and Palestinian security officials. The Lebanese group's influence has become increasingly visible in the West Bank since last month's assassination of its military chief, Imad Mughniyah, in an explosion in Syria that Hezbollah has blamed on Israel.

It remains unclear whether more Palestinian militants are simply taking their cue from Hezbollah, or whether the Lebanese group is getting more directly involved in violence in the Palestinian territories, in part to make good on its threat to avenge Mughniyah. Hezbollah has been sending large amounts of money to Palestinian militants in the West Bank since 2000.

Israel has not said whether it was behind the car bomb that killed Mughniyah. But since his death, Hezbollah's leaders have signaled they'll carry out revenge attacks in Israel itself, not just against Israeli targets abroad, said Amal Saad-Ghorayeb, a Hezbollah specialist in Lebanon.

"Hezbollah's leaders made it clear that they are in a new stage of their war with Israel, and definitely the tools will be changed in this new phase," she said.

However, the extent of Hezbollah's involvement remains murky.

A group calling itself Galilee Freedom Battalions - the Martyrs of Imad Mughniyah and Gaza has claimed responsibility for last week's shooting attack in Jerusalem.

Maj. Gen. Raji al-Nijmi, a senior Palestinian security official, said he believes the group is a Hezbollah front, but said he has no hard evidence that it carried out the attack. "This name [of the group] is a lie, it's just Hezbollah playing politics," al-Nijmi said.

The moderate Abbas government in the West Bank is trying to limit Hezbollah's influence, while the Lebanese guerrilla group has found an eager ally in the Islamic militant Hamas, which controls Gaza.

Israeli and Palestinian officials have said they suspect possible involvement of both Hezbollah and Hamas in the Jerusalem shooting. The assailant, a 25-year-old resident of Jerusalem, was killed by an off-duty Israeli soldier at the scene of the attack. A Hezbollah flag was briefly raised at his mourning tent, along with Hamas banners.

On Thursday, mourners marching in a funeral procession for four Palestinian militants killed the day before by Israeli troops in the West Bank town of Bethlehem chanted, "Hezbollah is coming." The bodies of local Islamic Jihad leader Mohammed Shehadeh and another militant were wrapped in Hezbollah flags.

"Mohammed was a big fan of Hezbollah's way of fighting against the Israeli occupation," said the slain man's cousin, Khalil. He said Shehadeh converted from Sunni to Shiite Islam - the denomination of Hezbollah supporters - in a show of support.

Hezbollah enjoys widespread popularity in the Palestinian territories because of its brazen actions against Israel, including a guerrilla war that pushed Israel to withdraw from southern Lebanon in May 2000. Hezbollah's star rose further after fighting Israel's army to what some view as a draw in the summer of 2006.

After the outbreak of the second Palestinian uprising (intifada) in September 2000, Hezbollah began funneling millions of dollars to Palestinian militants in the West Bank to help finance attacks against Israel, according to Israeli and Palestinian security officials as well as the militants themselves.

The Lebanese guerrillas worked directly with leaders of Islamic Jihad, who were based in Damascus, but also recruited gunmen from moderate Palestinian President Mahmoud Abbas' Fatah movement, the security officials and militants said.

Operatives of Fatah's violent offshoot, the Al Aqsa Martyrs Brigades, said Hezbollah approached them from the first months of the uprising and offered help.

One Al Aqsa leader in the West Bank city of Nablus said privately that his group used to receive $8,000 a month to buy weapons and bullets. He spoke on condition of anonymity, fearing Israel would harm him.

Hezbollah halted the payments after most Al Aqsa men accepted an amnesty offer by Israel, said another local Al Aqsa leader, Mahdi Abu Ghazaleh.

However, Israel recently complained to Palestinian security officials that some Al Aqsa activists are still in contact with Hezbollah, said al-Nijmi, the Palestinian security officer.

"Israeli intelligence is listening to the phone calls between Hezbollah and the Al Aqsa supporters," al-Nijmi said, adding that Hezbollah has started placing the calls from outside Lebanon to avoid some of the monitoring.

Israeli analyst Efraim Inbar said he believes Hezbollah's influence in the Palestinian territories is on the rise, but it's difficult to quantify it.

Inbar said Israel should be more concerned about Hezbollah's role in Gaza. "We already see Hezbollah methods in Gaza. We know that some Palestinians have undergone training in Hezbollah camps," he said.