Hospital officials in the Zeitoun neighborhood in Gaza City said that two Palestinians were killed and 18 others were wounded, at least four of them gunmen, after Israel Defense Forces troops entered the area early Tuesday.

One IDF soldier was lightly wounded during the operation.

IDF soldiers took up positions on the roofs of three houses, surrounding one of them, and traded gunfire with armed Palestinians. Residents said the houses belonged to Islamic militants who led attacks on nearby Jewish settlements.

Residents of the neighborhood heard an explosion after the soldiers entered the city, as attack helicopters flew overhead. Helicopters fired machine guns in the area near the Gaza seacoast, and ambulances were heard racing to the scene.

The IDF said that Givati brigade troops entered the city in an operation aimed at the "terrorist infrastructure" in the city.

"A force has entered the [Zeitoun] area and we are carrying out a pinpoint operation against the terrorist infrastructure," an Israeli military source said.

Israeli Radio reported that the force was searching for workshops where Qassam rockets used by militants against Jewish settlements in Gaza and towns in southern Israel were being made.

In another part of Gaza, several IDF tanks and bulldozers entered the Rafah refugee camp on the Egyptian border and tore down a structure, residents said.

Court hands down life sentences to two terrorists The Samaria military court in the West Bank on Monday sentenced two terrorists from Nablus to life sentences.

Amir Dukan, 30, from the Balata refugee camp was sentenced to six life sentences and Alam Kabi, 33, from Nablus, was sentenced to nine life sentences.

The men, members of Tanzim and the Popular Front for the Liberation of Palestine, were involved in four separate terror attacks in which eight Israelis were killed.

The two dispatched terrorists who carried out the attack on an Israel Defense Forces outpost near Nablus in February 2003, in which two soldiers were killed. In addition, the two dispatched the suicide bomber who blew himself up at a train station in Kfar Sava, killing security guard Alexander Kostyuk in April 2003. The two also dispatched terrorists who carried out a shooting attack at an IDF base in Bekaot, in which two soldiers were killed.

Kabi was also involved in dispatching the suicide bomber who blew himself up at a Netanya market in May 2002, killing three people.

Security forces foil suicide bombing set for Tel Aviv Israeli security forces thwarted a suicide bombing planned for Tel Aviv when they arrested a Palestinian hermaphrodite armed with a 15-kilogram bomb in the West Bank, Palestinian sources said.

Amal Juma'a, 32, is a hermpahrodite who goes by the name Ahmed, Palestinian Authority sources told Army Radio. The report said the terror attack was planned for Monday.

Israel Defense Forces troops arrested Juma'a in the West Bank city of Nablus and transferred her to the Shin Bet security service for questioning. Security forces also arrested the suspect's 15-year-old brother and a neighbor of the same age, who were also being questioned Monday, Army Radio said.

Palestinian security forces defused the bomb, according to the report.

IDF razes 10 houses in Gaza In the Gaza Strip, IDF troops demolished 10 houses Monday along the road where Palestinian gunmen ambushed settlers during a memorial service the day before for the members of the Hatuel family, who were killed in a terror attack at the spot last week.

Dozens of homes have been destroyed in the week since Tali Hatuel and her four young daughters were killed in an ambush. Palestinian sources and international groups said that some 50 families have been left homeless by the operation.

Some 40 homes were demolished last week, a few days after the deadly ambush, and two Palestinian were killed and 15 injured.

Following the assault on the settlers Sunday, IDF soldiers fired tank shells at the two militants, who came from Khan Yunis and were dressed as women. Islamic Jihad claimed responsibility for the shooting.

One gunman was killed; he was identified as Nahad Abu Hadaf, 22. A large number of the houses demolished in the area in the last week were near Abu Hadaf's home and Palestinian sources claim that Abu Hadaf carried out the attack to avenge the house demolitions.

A number of petitions have been filed with the High Court of Justice to stop any more homes being razed, but the demolitions have only been postponed for a very short period of time in response.

Also Monday, a Palestinian youth died in the village of Abu Dis, east of Jerusalem. Palestinian sources identified the youth as 19-year-old Fadi Bacher, who lived in the area.

The Israel Defense Forces said in response that the youth was killed when hit by a Palestinian vehicle that did not stop in time, the Itim news agency reported.

Palestinians, however, claim that the youth was shot by Border Police officers.

In the southern Gaza Strip, IDF troops and Border Police uncovered a weapons-smuggling tunnel early Monday, close to the town of Rafah, the Itim news agency reported.

The tunnel, used to bring arms from Egypt into Gaza Strip, had been dug in an olive grove. Troops discovered the tunnel during a routine patrol of the Israel-Egypt border.

Soldiers detained for questioning a number of Palestinians they found digging inside the tunnel. Further investigation revealed another three openings to the tunnel, which was then destroyed.

An anti-tank missile was also fired at IDF troops in the area early Monday, Itim said. The troops returned fire in the direction of those who had fired the missile. There were no Israeli injuries, nor did the missile cause any damage.

In the West Bank, troops operating overnight arrested four Palestinians, including activists from Fatah and Hamas.