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Israel Defense Forces Chief of Staff Dan Halutz characterized Tuesday's escalation in Gaza as part of the "internal Palestinian dialogue," telling reporters in Sderot that the army does not yet plan to undertake operations.

Three hothouse workers were killed and five others were wounded Tuesday afternoon in a mortar shelling on hothouses in the Gaza Strip settlement bloc of Gush Katif.

"I would suggest that as a state we not act like terrorists," Halutz told Channel 2. "Overreacting is not a modus operandi."

"Nonetheless we must examine all the ramifications of acting against terror organizations," the chief of staff said. "At a certain point, our patience will wear thin, but I would suggest that we decide when."

Halutz hinted at Palestinian Authority Chairman Mahmoud Abbas' recent decision to postpone parliamentary elections, contrary to agreements he had made with rival Palestinian factions, as the motive behind the latest escalation.

"The fact that they are thinking the right things and saying the right things but not doing the rights things says it all," Halutz said.

One of the workers killed in the Ganei Tal settlement was Palestinian and the other was Chinese. All wounded were Palestinian, two of them sustaining critical wounds and the other four sustaining moderate injuries. They were all evacuated to Soroka Medical Center in Be'er Sheva.

A third worker, a Palestinian, died of his wounds Tuesday evening in the hospital.

The Islamic Jihad militant group claimed responsibility for the attack, Israel Radio reported.

Later on Tuesday four Qassam rockets hit open areas near four different communities in the Western Negev, Israel Radio reported. An hour earlier Palestinians fired an anti-tank missile at Israeli Defense Forces soldiers near Rafah. There were no casualties in either incident.

Earlier in the day, the military wing of Hamas fired a volley of Qassam rockets and mortar shells from the Gaza Strip at Israeli towns and settlements, threatening the fragile lull in violence in recent months.

Meanwhile, an Islamic Jihad commander in the West Bank and an unarmed Palestinian policeman were shot and killed in clashes with IDF troops near the West Bank city of Jenin on Tuesday morning, according to Palestinian sources.

The Islamic Jihad leader was later identified as 25-year-old Morwah Kamil, who the IDF confirmed was the object of the raid.

An IDF soldier was lightly hurt in the exchange of fire.

The gun battle took place when IDF troops surrounded a house in the village of Qabatiyah during an operation to arrest suspected militants. IDF sources said the raid was targeted against members of Islamic Jihad.

Chanting "revenge, revenge," hundreds of Palestinians marched through the center of Jenin after the body of Maraweh Ikmil, Islamic Jihad's commander in Qabatiyah, was brought to the hospital.

The IDF sources said gunmen in nearby alleys also fired at the soldiers, who shot two of them.

Palestinian residents and medics said a uniformed Palestinian policeman, who was not carrying a weapon, was also shot and killed by Israeli forces during the fighting and that two Palestinians throwing stones at the troops were wounded.

Also Tuesday, IDF troops shot and killed a man who climbed over the fence at the Egypt-Gaza border and entered southern Gaza. IDF officials said they believed the man was an Egyptian involved in weapons smuggling. No weapons were found on his body, the officials said.

Later in the day, Palestinian militants fired an anti-tank rocket at IDF troops in the Rafah area in south Gaza, according to Israel Radio. No injuries were reported.

Mofaz weighs response to rocket fireDefense Minister Shaul Mofaz convened a meeting of senior IDF officers Tuesday morning to discuss Israel's response to a Qassam rocket attack on the southern town of Sderot earlier in the day. Hamas claimed responsibility for the attack.

Three people - a mother and two daughters aged 6 and 18 - were treated for shock at Barzilai Medical Center in Ashkelon in the wake of the rocket attack.

Palestinian militants in the north Gaza Strip town of Beit Hanun fired four rockets at Sderot, in the first attack on the town this week.

At the end of May, Mofaz threatened that Israel would respond severely to any further rocket or mortar attacks.

At least two of the home-made Qassam rockets fired Tuesday struck targets in Sderot. One hit the roof of a house, causing some damage. A search by security officials located two other rockets that had landed in an open area close to the town.

Sderot has been plagued by Qassam fire during the four and a half years of fighting between Israel and the Palestinians. The town recently introduced an early-warning siren which gives residents limited advance notice of rocket fire.

The military wing of Hamas, Iz al-Din al-Qassam, said the rocket attack came in response to Israeli violations of the calm reached after February's Sharm el-Sheikh summit and to Monday's confrontation between police and Palestinians at the Temple Mount.

"Any harm that befalls Al-Aqsa Mosque will mean an open, fierce war in all of our land of Palestine, and by all means," the Hamas military wing said in a statement.

But IDF sources said the attack appears to be related to internal political developments within the Palestinian Authority, primarily PA Chairman Mahmoud Abbas' postponement of parliamentary elections and his visit to Gaza, which is set for Wednesday.

The sources said no Palestinians have been injured by IDF activities in Gaza in recent days and that the rocket strike does not appear to be a means of exerting pressure on Israel, but "fire whose intention is to cause injury."

Sderot Mayor Eli Moyal said one of the rockets had landed near his house. "I smelled gunpowder and my house shook," he said. "It appeared the last Qassam rocket fell not far from here."

Moyal warned that the disengagement would not put an end to the rocket attacks.

"I was woken up by the warning," said Shai Niv, a student who lives in the area. "There were two small explosions followed by a massive one, and people started to scream."

Niv said residents of the area claimed the explosion was stronger than in previous Qassam strikes.