Two Palestinian bystanders were killed and 18 people were wounded, including six border policemen, in an explosion yesterday afternoon south of the Qalandiyah checkpoint at the northern entrance to Jerusalem.

Two of the border policemen were seriously wounded and a third remains in critical condition. All three were taken to Jerusalem's Hadassah University Hospital, Ein Karem.

Three policeman were taken to Hadassah University Hospital, Mt. Scopus with light injuries and have since been released.

Fatah's military wing, the Al-Aqsa Martyrs' Brigades, assumed responsibility in a statement yesterday by its spokesman in Jenin, Zakariya Zubeidi. Zubeidi also said the original intention was to deploy a suicide bomber, but that the plan was scrapped in favor of attacking the checkpoint.

As of last night, a state of high alert remained in force for the Jerusalem region because of the possibility that other terrorists with explosive devices remain at large.

The two Palestinians killed were Ayid al-Daer, 27, from a village north of Ramallah, who was a passenger in a car parked nearby, and Salah Abu Sneina, 60, of Jerusalem, who was driving by with his family in his car. His 4-year-old grandson was seriously wounded, and his two sons sustained moderate injuries, as did his wife. They were taken to a hospital in Ramallah.

After the attack, the Israel Defense Forces imposed a curfew throughout Jenin, from where the Shin Bet and police investigation indicates the terrorist was dispatched. He traveled by car from Jenin southward, toward Jerusalem. Possibilities being considered include that he intended to carry out the attack in the center of the capital, or in another city within Israel.

The terrorist was apparently in a car that drove on the Ramallah bypass road to the junction south of Qalandiyah checkpoint, and from there moved another several hundred meters southward, to between the Qalandiyah and A-Ram checkpoints.

About 30 minutes before the 3 P.M. explosion, the IDF was alerted that a terrorist was en route to Jerusalem with an explosive device. Security forces deployed in the city's northern neighborhoods and along northern entrance routes.

Soldiers at the Qalandiyah checkpoint (the main crossing from Ramallah to Jerusalem) began a careful search of Palestinian cars and pedestrians. Additionally, makeshift spot checkpoints were set up on access roads to the capital. A six-man Border Police team took up position a few hundred meters before the Qalandiyah checkpoint, parking its police jeep perpendicular to passing traffic. Three policemen got out and began searching cars stopped on the road.

It is thought that the terrorist reached the area, noticed the turmoil and realized he would not be able to get the bomb past the checkpoint into Jerusalem. Deciding to detonate the bomb on the spot, he removed a bag containing medium-intensity explosives and packed with metal shards and placed it at the side of the road, between two cars and next to stalls belonging to Palestinian vendors.

When a Border Police detail neared the site, he detonated the bomb from a distance by dialing a cellular phone attached to it.