The Middle East crisis threatened to spiral out of control as the Israeli Army opened its biggest offensive in the West Bank and Gaza since Israel seized the territories in 1967.
Frantic diplomatic efforts continued last night after 150 armoured vehicles, including tanks, thrust into Palestinian areas, tearing up roads and crushing cars in Ramallah, the main Palestinian commercial city in the West Bank.
At least 41 people were killed on both sides, but the campaign, now involving 20,000 Israeli troops, did not stop Palestinian attacks.
Two gunmen disguised as Israeli soldiers killed six civilians inside Israel near the Lebanese border hours after the military operations started. Both were shot dead.
UN Secretary-General Kofi Annan said the carnage had soared to horrifying levels and urged leaders on both sides to "lead your peoples away from disaster".
In his harshest criticism of Israel, Mr Annan urged it to end its "illegal occupation" of Palestinian lands - the first time he has branded Israeli actions illegal.
He also urged Palestinians to halt "morally repugnant" acts of terror and suicide bombings.
In probably the only hopeful sign in a disastrous day for peace prospects, the United States endorsed for the first time in the UN Security Council the idea of a Palestinian state. After intense behind-the-scenes negotiations, Israel's main ally affirmed a draft resolution envisaging "a region where two states, Israeli and Palestinian, live side by side within secure and recognised borders".
But the mounting violence threatened to derail tomorrow's truce mission by the American MiddleEast envoy, Anthony Zinni.
In Ramallah, scene of the worst fighting, heavy shooting erupted as Israeli soldiers searched houses and Israeli helicopter gunships opened fire on the al-Am'ari refugee camp on the city's outskirts.
By mid-afternoon, the usually bustling city where Palestinian Authority leader Yasser Arafat has a base was empty, except for gunmen firing on troops who went from house to house searching for weapons and militants.
In the main square, Palestinians strung up the corpse of an alleged collaborator with the Israelis.
The invasion force stayed out of Mr Arafat's headquarters in the city, and Israel's Army chief, Lieutenant-General Shaul Mofaz, said there were no plans to topple or harm him.
Israeli troops and tanks also battled their way into the Jabalya refugee camp in the Gaza Strip, killing at least 17 Palestinians in fierce fighting, Palestinian hospital sources and witnesses said.
People ran screaming for cover down a warren of alleys as the tanks surged into the densely populated camp of about 90,000 refugees. The Army withdrew four hours later.
Nine Palestinians were killed in other violence in Gaza, and five died in the West Bank.
- AGENCIES
Feature: Middle East
Map
UN: Information on the Question of Palestine
Israel's Permanent Mission to the UN
Palestine's Permanent Observer Mission to the UN
Middle East Daily
Arabic News
Arabic Media Internet Network
Jerusalem Post
Israel Wire
US Department of State - Middle East Peace Process
Israeli tanks blast Mideast peace hopes
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