Israeli forces in the West Bank city of Nablus early Monday shot and killed Islamic Jihad's top commander in the region, the militant group said.
Lt. Col. Benjamin Shick, an Israeli commander, said his forces caught a group of militants, including Ahmed Abu Sharik, 30, off guard on the second day of a raid in Nablus.
"We found a group of people we have been seeking for a while and we went for them," he said. "We know every street and alley, where they are and where they hide."
Military officials said Abu Sharik had been involved in numerous attacks on Israeli soldiers, and he helped plan a recent suicide attack in Tel Aviv. The army also arrested 15 militants overnight throughout the West Bank.
Later in the day, Hamas presented Ismail Haniyeh as its choice for Palestinian prime minister, officials said, a step toward installing the first government to be headed by the militant Islamic group.
Officials said Palestinian leader Mahmoud Abbas would present Haniyeh with his formal letter of appointment Tuesday evening, setting in motion the process of naming a new Cabinet to be approved by the Hamas-dominated parliament.
Haniyeh, who is known as a pragmatist, said he would try to form a joint government with Fatah — the traditional Palestinian ruling party that Hamas trounced in the election — so it can "shoulder its responsibilities in the political area and internal issues." So far, Fatah has refused to join.
Haniyeh also criticized Israel for freezing transfers of tax money over the weekend.
"The Israelis are trying to starve innocent people by taking money from our taxes, and we are going to fight this by all legal means," Haniyeh said. "This collective punishment will not break the determination of the Palestinian people."
Haniyeh will have five weeks to form a government. The process of picking him as prime minister-designate is a mere formality after last month's election in which Hamas won 74 seats in the 132-member legislature. Abbas' Fatah Party, which had dominated Palestinian life for four decades, won only 45.
It had been expected that Haniyeh would receive the official appointment on Monday. Palestinian officials did not explain the delay, but Abbas has been pressing Hamas to moderate its anti-Israel positions and accept the idea of peace talks. Hamas has refused.
Hamas assumed control of the Palestinian parliament Saturday after winning Jan. 25 elections.
The announcement came after Hamas legislators spent the day meeting with potential governing partners, including the violent Islamic Jihad group, which did not participate in the elections.
Mahmoud Zahar, the Hamas official leading the talks, said the group expected to form a government in the next two weeks.
"We are optimistic about establishing a national unity government that can represent a national attitude," Zahar said after speaking with the Popular Front for the Liberation of Palestine, a small radical faction.
Hamas, which has sent dozens of suicide bombers into Israel, is listed as a terror group by the U.S. and European Union. Israel and Western countries have demanded Hamas renounce violence and recognize Israel's right to exist, but Hamas has resisted pressure to moderate.
Zahar said Monday that Hamas was willing to establish a temporary state in the West Bank, Gaza and east Jerusalem as an interim step toward taking over Israel.
Many Western countries have threatened to cut off hundreds of millions of dollars in funding for the Palestinian Authority if Hamas does not change. Israel responded to the inauguration of the Hamas-led parliament by cutting off millions of dollars of vital funds to the Palestinian Authority and branding it a "terrorist authority."
Israel's acting Foreign Minister Tzipi Livni called for foreign nations to work with Israel to isolate Hamas.
"There is a need for the international community to have a united front regarding the legitimacy of the Palestinian Authority in the Hamas era," she said.
Yuval Diskin, head of Israel's Shin Bet security service, told Israeli lawmakers Monday that a Hamas-led Palestinian Authority posed a serious danger to the Jewish state.
"A Hamas state on the borders of Israel is a real threat. This will be a radical Sunni state that radical forces can reach from around the world," he told the Knesset's Foreign Affairs and Defense Committee. "Therefore, a Hamas state like this, with military and terror capabilities, is a strategic threat to Israel."
Abbas, a moderate, has called on Hamas to honor existing agreements with Israel and allow him to continue pursuing a peace deal. Hamas rejected the calls, but it said it would seek a compromise with Abbas.
Israel on Sunday halted its monthly transfers of about $50 million in tax money it collects for the Palestinians. But the government refrained from harsher measures, saying it did not want to hurt ordinary Palestinians.
Abbas has said the cuts in aid were already being felt.
The cash-strapped Palestinian Authority relies on the tax money to help pay the salaries of roughly 140,000 government employees, including about 57,000 in the security forces. In recent months, security personnel have demonstrated and taken over government buildings when they have not been paid on time.
Should the government, the Palestinians' largest employer, be forced to lay off tens of thousands of workers, it would lead to increased chaos and poverty.
Abbas said Sunday he agreed to return $50 million in special aid given by the U.S. government. The United States asked for the money back after Hamas' election victory.