A suicide attack that killed seven Israelis failed to derail efforts for an Israeli-Palestinian truce Wednesday. U.S. envoy Anthony Zinni later mediated a meeting between both sides but it didn't produce results and another session was set.

Israel had said that for now it wouldn't retaliate for the bombing of a bus near the northern town of Afula and agreed to meet with the Palestinians in an effort to produce a cease-fire.

Israeli and Palestinian officials reported that the meeting of security commanders from both sides with U.S. envoy Anthony Zinni, in Tel Aviv late Wednesday, ended without a truce agreement.

Israeli Defense Ministry spokesman Yarden Vatikay said another meeting would be held Thursday or Friday. "There are still gaps," he said.

Palestinian negotiator Saeb Erekat said U.S. mediators would have to choose between the Israeli and Palestinian proposals before an agreement could be reached.

Zinni earlier contacted Israeli Prime Minister Ariel Sharon and Palestinian leader Yasser Arafat to ensure that the delicate truce talks would not be derailed by the Islamic militant suicide bomber's attack. The explosion, which blew gaping holes in the sides of the bus, also injured 27 people, many of them Arab Israelis.

Israelis and Palestinians had both hinted a truce could be declared as early as Thursday.

The militant Islamic Jihad group claimed responsibility for Wednesday's bombing and said it would not abide by any cease-fire agreement.

"I had the honor to organize (this attack), and I want to tell the Israelis that as long as Sharon is killing Palestinians, we in Islamic Jihad will kill Israelis," said Mahmoud Tawalbi, head of group in the West Bank town of Jenin.

The U.S. truce plan, written last year under the guidance of CIA director George Tenet, calls on Palestinians to "apprehend, question and incarcerate terrorists." Israel is prohibited from "attacks of any kind against Palestinian Authority facilities."

No specific mechanism is foreseen to prevent retaliation for an attack, and both sides will have to exercise restraint, said a diplomat, who spoke on condition of anonymity.

However, defense ministry spokesman Vatikay said there will be no provisions in the agreement for dealing with attacks. He said there can be no cease-fire if there are terror attacks.

Several previous cease-fires collapsed, and this month has seen the deadliest spurt of violence since the fighting began in September 2000.

"The patience of the (Israeli) public will not be able to hold out for another attack or two," said Israeli Labor Minister Shlomo Benizri.

Following Wednesday's bombing, Sharon said Arafat bore ultimate responsibility for failing to prevent it. Arafat has "not moved away from a policy of terror, has not taken any steps and has not given any orders to stop attacks," Sharon said.

But Israel Radio, citing sources close to Sharon, said Israel agreed to hold off on retaliation and not cancel the Wednesday night talks.

The Palestinian Authority denounced Wednesday's bombing and said it was working for the cease-fire, which would require it to arrest militants, something it has been reluctant to do.

On Tuesday, Sharon said that if a cease-fire is in place, Arafat will be permitted to attend an Arab summit in Beirut next week, where a Saudi peace plan is to be presented that calls for establishment of normal relations between Israel and the Arab world in exchange for a return of all lands captured in 1967.

Presidents Hosni Mubarak of Egypt and Bashar Assad of Syria discussed the plan in talks in Cairo on Wednesday. They said in a joint statement they would work to persuade fellow Arab leaders to agree on a "unified stand" on the Saudi initiative at the summit.

While an Israeli-Palestinian cease-fire deal still appeared within reach, each side was looking to the other to take a big first step.

Israel said the Palestinians would have to immediately crack down on militants, including widespread arrests. The Palestinians said the Israelis would have to lift military roadblocks that have kept most Palestinians confined to their hometowns and villages.

In Wednesday's attack, the suicide bomber sat down in the middle of a crowded bus and blew himself up as the bus was traveling on a main highway on the outskirts of the Arab village of Musmus.

"People were blown out of the windows and were lying on the road on both sides of the bus," said bus driver Yosef Ben-Yosef. "Inside (the bus) dead and wounded people were lying everywhere ... It was ghastly, indescribable."

Islamic Jihad identified the bomber as Rafat Abu Diyak, 24, and said the attack was revenge for Israel's killing of group members in recent military strikes. Israel's recent raids included an incursion into Diyak's hometown of Jenin earlier this month, aimed at rooting out militants.

After the attack, Diyak's father Tahseen accepted condolences at the family's home in a poor neighborhood in Jenin.

"Thank God for everything, my son will go to heaven," Tahseen Diyak said.