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At least 18 people were killed and over 110 were wounded in a suicide bombing on a packed bus in downtown Jerusalem last night. Soon after the attack, Israel suspended all talks with the Palestinian Authority on handing over four West Bank cities.

Thirteen of those wounded in the attack, which took place around 9 P.M. in the capital's Shmuel Hanavi neighborhood, are in serious condition, while the rest were lightly injured.

"I heard a huge blast, and when I turned around I saw parts of the bus flying everywhere," said Jacob Bitnovsky, a passing motorist. "I got out of the car and ran. There was a lot of smoke and running, and I saw a child on the ground gasping for air."

Most of the people on the tandem bus, which was traveling from the Western Wall to the religious neighborhood of Har Nof, were Haredim, Channel One Television reported, adding that police are checking the possibility that the terrorist was disguised as a Haredi Jew. According to the report, the police said that many of the casualties are children.

Yehuda Meshi-Zahav, the director of ZAKA, the organization that deals with the dead after an attack, described what he called "a miracle" after finding a three-month old baby alive in the burned-out bus. "We had finished removing the injured people from the bus, and we were sure that no one was left alive when we heard a baby's crying from under the bodies. In the midst of all that death, it was moving to find the baby unharmed."

The United States quickly condemned the attack. "We condemn this vicious act of terrorism in the strongest terms," said U.S. National Security Council spokesman Sean McCormack. "Our thoughts and prayers go out to the families of the victims and to those injured. We call upon the Palestinian Authority to act to dismantle terrorist networks." McCormack declined to comment on Israel's decision to freeze talks with the Palestinians. Israel had planned to hand over Jericho and Qalqilyah to Palestinian control later this week.

Palestinian Prime Minister Mahmoud Abbas also condemned the attack. "I announce my strong condemnation of this horrible act which does not serve the interest of the Palestinian people at all, and I have given my instructions to the security minister to launch an investigation," said Abbas, who was meeting with Islamic Jihad representatives in Gaza at the time of the blast in an attempt to persuade them to halt attacks against Israelis.

A short time after the explosion, the Hezbollah-run television station Al-Manar and several news agencies received phone calls claiming to be from Islamic Jihad's military wing in which they took responsibility for the attack.

Hamas issued a statement saying that the suicide bombing was a natural Palestinian reaction to daily crimes committed by Israel against the Palestinian people. Late last night, the group distributed a leaflet in Hebron saying the bombing was carried out by a supporter of the group, Raed Abdel-Hamed Mesk. However, Hamas leader Abdel Aziz Rantisi insisted that Hamas was not involved. "We are commited to the truce. I don't know who carried out this action," he said.

According to the leaflet, Mesk, 29, an imam at a Hebron mosque who was married with two children, was a known Islamic Jihad militant and was close to the group's leader in the West Bank town, Mohammed Sidr, who was killed by the IDF Thursday. The leaflet also said that the cell that carried out the attack was named after Abdallah Alqawasmeh, the head of the Hamas military wing in Hebron who was killed by the IDF there several weeks ago.

The leaflet called last night's attack "a modest and preliminary response to the violation of the cease-fire by the Sharon government. Whoever attacks us with water, we will attack him with fire."

Hamas sources said that the attack was intended to transmit the message that violations of the cease-fire will be answered from within the area in which they are committed. They said that last week's terror attacks in Rosh Ha'ayin and Ariel came out of the Asqar refugee camp near Nablus, where the IDF killed two senior Hamas militants, while the suicide bomber in last night's attack came from Hebron, where Sidr and Alqawasmeh were killed. "We have proved that we are not weak, and that we will hit as needed. We obligated ourselves to the hudna only for internal Palestinian reasons." Spokesmen for Jihad issued similar statements.

Palestinian terror organizations declared a unilateral three-month cease-fire on June 29, but have always said they would continue taking revenge for Israeli killings of their operatives.

Dore Gold, an Israeli government spokesman, said Israel was paying the price for the Palestinian Authority's inability to rein in militants. "Israel will have to protect its population," he said.

Knesset members from all parties condemned last night's attack. MK Ehud Yatom (Likud) called for the immediate deportation of PA Chairman Yasser Arafat and to stop negotiations with the PA. Science and Technology Minister Eliezer Sandberg (Shinui) said the attack proved how out of touch with reality Abbas is. Coalition head MK Gideon Sa'ar said: "The PA should not be accused of continuing to cheat us at a time when Israel is cheating itself."