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With war in Iraq brewing over the region, Israel and the Palestinians sank further into their cycle of violence Thursday as 15 Palestinians were killed, most in a ferocious raid in the northern Gaza Strip.

Palestinian leader Yasser Arafat, meanwhile, facing intense pressure to reform his administration offered the Palestine Liberation Organization's number two and his right-hand man, Mahmud Abbas, the job as his first prime minister.

Some 40 Israeli tanks stormed the Jabalya refugee camp in a four-hour raid early Thursday and were met with intense small arms fire. The raid came a day after a Palestinian suicide bomber blew up a bus in northern Israel and killed 15 passengers, including six teenagers and two soldiers.

According to Palestinian sources, eight people were killed instantly and dozens wounded when Israeli tanks fired controversial flechette shells as they were withdrawing from the entrance of adjoining Jabalya town.

Among the three other Palestinians killed in the raid was a 60-year-old man critically wounded when his house was hit by a helicopter rocket and who died of his wounds as ambulances were unable to reach him, they said.

An Israeli army spokesman said only one flechette was fired when a soldier spotted a Palestinian about to launch a rocket, but witnesses charged the shell was deliberately aimed at a group of civilians that included children.

Two journalists from the Reuters news agency were wounded in the devastating shell explosion, one of them seriously. Flechette shells are anti-personnel weapons which spray hundreds of tiny darts in all directions.

The high death toll came after Israel's latest operations in the Gaza Strip sparked criticism of the army's heavy-handed methods and calls for restraint.

The latest raid earned a rare rebuke from its chief ally US President George W. Bush, who is keen to keep the Middle East calm ahead of leading any invasion of Iraq, and who said he was "very concerned" over the fresh bloodshed.

On the Palestinian political front, Arafat proposed Abbas, 68, fill the post of prime minister he is creating under intense international pressure to reform the Palestinian Authority, which has been accused of corruption and links to militant groups.

A senior official said Arafat made the offer at a meeting of the PLO executive in the West Bank city of Ramallah -- where the veteran Palestinian leader has been held a virtual prisoner for more than a year at a headquarters battered by the Israeli army -- but Abbas refused to immediately accept.

He quoted Abbas, better known as Abu Mazen, as saying he wanted to wait for the "legal procedures which will define exactly the prerogatives" of the post and see what his future role would be.

He specifically told Arafat the nomination should wait for meetings of the PLO's central council and the parliamentary Palestinian Legislative Council expected to open Saturday in Ramallah. Both bodies have to vote on the matter.

A noted pragmatist, Abbas was one of the architects of the 1993 Oslo peace accords with Israel which lie in tatters after 29 months of bitter fighting, but is not a popular figure among ordinary Palestinians.

On the ground, four other Palestinians were shot dead, including a mother of 10 children killed in her backyard as Israeli troops moved into a village near the northern West Bank town of Jenin, according to Palestinian medical sources.

The others were a gunman who fired on soldiers outside a Jewish settlement east of the northern West Bank town of Nablus; a 16-year-old stone-thrower in central Nablus; and a militant from the Islamic Jihad group who was resisting arrest in the southern West Bank town of Bethlehem.

A 70-year-old also died earlier in the day of wounds sustained exactly a month ago when the army raided eastern Gaza City, medical sources said.

Following the overnight raid into Jabalya, the wounded poured into Gaza City's main Al-Shifa hospital, where there were scenes of grief and panic.

Chief doctor Muawia Abu Hassanein warned his medical teams would likely lack some blood types to treat the wounded.

Israel denied the raid was in direct retaliation for the devastating suicide bombing of the bus in the town of Haifa that also wounded 40 people.

"There is no direct relation, but the raid was part of an ongoing effort against the Gaza Strip, which is the centre of Palestinian terrorist organisations," an army spokesman said.

Later Thursday, the Palestinian hardline Islamic group Hamas -- one of whose leaders was arrested during the Gaza raid -- fired several home-made rockets from Gaza at the southern Israeli town of Sderot, causing no injuries.

Dozens of Israeli tanks moved later into a Beit Lahiya village and another one near Jabalya, although there were also no immediate reports of injuries.

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