Israeli troops hunting suspected Palestinian militants raided the West Bank city of Bethlehem early Monday as part of what the military said are pinpointed, intelligence-driven incursions into Palestinian areas.

In Jerusalem, police defused a bomb discovered by a gardener outside an apartment building. The explosives had been hidden in a plastic bag.

Defense Minister Binyamin Ben-Eliezer said that despite continued warnings about plans by Palestinian militants to carry out suicide attacks, Israel was not on the verge of another large-scale military operation on par with the six-week ``Defensive Shield'' offensive which ended earlier this month. 

Dozens of armored vehicles and jeeps drove into Bethlehem and surrounding towns and refugee camps before dawn Monday and imposed a curfew on tens of thousands of Palestinians in the second incursion into the area two days. The city had been under Israeli control for nearly six weeks during the previous offensive.

Israeli troops blocked access to Bethlehem's Church of the Nativity, built over Jesus' traditional birth grotto, to prevent another standoff at the shrine with Palestinian gunmen. During ``Defensive Shield,'' armed Palestinians fleeing advancing Israeli troops were holed up inside the shrine for 39 days.

In the Dheisheh refugee camp, Israeli troops arrested Ahmed Mughrabi, a local leader of the Al Aqsa Martyrs' Brigade, a militia linked to Palestinian leader Yasser Arafat's Fatah movement, residents said. Mughrabi is suspected by Israel of having recruiting two suicide bombers in Dheisheh, camp residents said.

In the adjacent town of Beit Sahour, troops commandeered a high-rise building and shut down a local radio station located inside, residents said. 

Israeli troops also entered the outskirts of Ramallah in the West Bank, blocking off a road and searching buildings, Palestinians said. Military sources confirmed soldiers were operating in the area.

In downtown Ramallah, about 2,000 supporters of Arafat's Fatah movement demonstrated for the release of Marwan Barghouti, the Fatah leader in the West Bank who taken into Israeli custody last month. Protesters wore shirts with Barghouti's picture on it while others waved Palestinian flags and posters. A recent poll indicated that Barghouti is the most popular Palestinian leader after Arafat.

Soldiers also remained in the town of Tulkarem and were surrounding another West Bank city, Qalqilya, the army said. A 55-year-old Palestinian was killed in Tulkarem when the army entered the city on Sunday, Palestinian witnesses said.

The incursions are part of a new tactic of quick raids based on intelligence gathered by Israel's security services, said army spokesman Brig. Gen. Ron Kitrey. ``The large number of warnings ... is worrying and requires us to be wound up as tightly as a spring, to be alert everywhere,'' Kitrey told Israel Army Radio. ``The method is to go to precise locations which we have earmarked.''

Ben-Eliezer said that despite the warnings, the level of danger to Israel's security posed by Palestinian militants cannot be compared to what it was before ``Defensive Shield.'' That operation was triggered by a suicide bombing in an Israeli hotel that killed 29 people at the start of the Jewish Passover holiday.

``I don't believe that we will ... go back to the territories unless the situation becomes intolerable as it was then,'' Ben-Eliezer said, referring to the Passover bombing. ``Then we had no choice.''

Jewish settlers in the West Bank, meanwhile, launched a campaign Monday to attract more Israelis to join them, prompting angry protests from Palestinians. Settlers in the Binyamin area, which is in the central West Bank, aim to bring 1,000 families, about 4,500 people, to their 32 settlements by the end of the year, said Elazar Sela, one of the organizers of the campaign.

Ben-Eliezer, who heads the moderate Labor party in the coalition government, said the campaign would lead to more Palestinian suicide attacks and would stifle any hope of a negotiated peace with the Palestinians.

``If anyone tries to hold a populating campaign in the situation which we face today, in my opinion we will pay dearly for it,'' he said.

The defense minister also said he believed that Arafat no longer had a role to play in leading his people to a peace agreement with Israel. ``Arafat does not give the impression that he is leading into that direction at all,'' the minister said.

President Bush on Sunday expressed hope that scrutiny of Arafat's leadership by fellow Palestinians could lead to changes in the Palestinian Authority, which White House advisers say is rife with division.

``People are beginning to question out loud as to why there hasn't been a success'' under Arafat, he said. ``Evidently, there's a new attitude emerging among the new leadership in the Palestinian Authority.''

Meanwhile, Arafat has approved plans to merge the Palestinian Authority's 12 separate security branches into four departments, all of which would come under the control of the Interior Ministry, Palestinian officials said. Arafat heads that ministry.

The move to streamline the overlapping security branches follows growing calls for reform from the international community and from Palestinians.

A Palestinian official, speaking on condition of anonymity, said the four departments would be the internal and external security services, a civilian police force and a national security force that would control borders.