The defense establishment has identified a joint effort by Islamic Jihad and Hezbollah to initiate a new wave of terror, Shin Bet security service head Yuval Diskin told the cabinet Sunday. Diskin said Israel is at the peak of a new wave of terror.

On Sunday, 58-year-old Kinneret Ben Shalom from Petah Tikva was killed and five people were injured when a knife-wielding terrorist attacked them in a taxi near Beilinson Hospital. The assailant, Ahmed Kafina, 22, from Sawiya near Nablus, was overpowered by passers-by.

Diskin said that over the weekend the IDF and the Shin Bet had thwarted at least two suicide bombings planned by Islamic Jihad cells in Nablus. He also told the ministers that in the past ten days "12 potential suicide bombers" had been arrested and "a new and worrisome wave of terror" was taking place. Security sources told Haaretz that the Islamic Jihad and Hezbollah headquarters in Damascus and Beirut were streaming large sums of money into the territories to spur on terror cells to carry out attacks.

The sources said they believed the most extreme Islamic groups were behind the attacks, in order to stymie efforts by Hamas, whose victory in the Palestinian parliamentary elections would make it harder for it to support further attacks, to reach an indirect agreement with Israel regarding a long-term cease-fire.

Islamic Jihad, which dispatched the suicide bomber to Tel Aviv's old central bus station three weeks ago, has been more active in recent weeks in Nablus. Security forces chalk the development up to its strikes against the organization in Tul Karm and Jenin, which forced it to direct its efforts elsewhere. Military sources said they had intelligence that Islamic Jihad was planning additional suicide bombings.

Over the past 24 hours, five Islamic Jihad and Fatah members have been killed in the Gaza Strip in IDF targeted operations, include two Islamic Jihad activists last night.

On Saturday night three members of Fatah's military wing were killed in an Israel Air Force bombing of the organization's offices in Gaza. One of those killed, Nasser Marshud, was described as the leader of a cell that had carried out Qassam attacks. GOC Southern Command, Major General Yoav Galant said, "If there is no quiet on the Israeli side, it will be much noisier on the Palestinian side."