Palestinians threatened new reprisals Thursday after a civilian was shot and killed when Israeli troops forced him to carry a message to a Hamas militant who depended on a wheelchair. Israeli forces then bulldozed the militant's house, killing him in the rubble.

In Gaza, a 5-year-old boy was killed and his grandfather and another man were critically wounded when Israeli troops opened fire on a residential area at the edge of Khan Younis near a Jewish settlement, Palestinians said. They said the firing was unprovoked. The Israeli military had no immediate comment.

In Gaza on Thursday, Hamas spokesman Abdel Aziz Rantisi said the death late Wednesday of one of the group's leaders, Nasser Jerar, "will not pass without strong punishment."

Israeli forces with bulldozers knocked down the house with Jerar inside it in the West Bank town of Tubas, and he was buried by the rubble, the military and residents said.

In a statement, the military said Jerar had continued his Hamas activities despite the severe injuries he suffered while trying to plant a bomb in May 2001.

The military said Jerar recruited homicide bombers and was planning a bombing aimed at bringing down an unidentified high-rise building in Israel.

Before demolishing the house, the military gave a local Palestinian resident, Nidal Daraghmeh, 19, a bulletproof vest and ordered him to go to the house and tell the 44-year-old Jerar to surrender, the army and Palestinian witnesses said.

But as Daraghmeh was approaching the house, he was hit by gunfire, the army said.

Palestinians charged that Israeli gunfire killed him, while the army said that he was hit by gunfire from inside the house.

The Israeli human rights group B'Tselem charged that soldiers used Daraghmeh as a "human shield."

The army said it was trying to prevent civilian deaths by having Daraghmeh warn any civilians who may have been in the house with Jerar.

Israeli Cabinet minister Ephraim Sneh, a former general, told Army radio: "I'm not sure that this stands up to the test of the law but there is the consideration that we have to prevent a large terror attack and it's clear which consideration wins in this situation."

Despite the violence, Israeli and Palestinian officials met to discuss steps to ease the economic hardships in the West Bank, but a security meeting tentatively set for Thursday was put off until next week.

The sides agreed late Wednesday that Israel would release another $14 million of $300 million in tax money it has been withholding from the Palestinians. Israel handed over one installment recently.

Also, Palestinian Finance Minister Salam Fayad announced he had formed a holding company that will oversee all funds handled by the Palestinian Authority. The Palestinian administration has been accused of widespread corruption.

Meanwhile, the Cabinet on Wednesday approved the first stage of the route of a fence meant to keep Palestinian militants out of Israel and its settlements.

The fence roughly follows the so-called Green Line, Israel's frontier before it seized the West Bank in the 1967 Mideast war.

A map of the initial 75-mile stage along the northern West Bank that appeared in Thursday's Haaretz newspaper showed several Palestinian villages and Israeli settlements in the West Bank would be on the Israeli-controlled side of the fence.

Israel intends for the fence eventually to cover the 215-mile length of the West Bank. The job could take years; for now, the focus is on the two most vulnerable patches -- the northern West Bank and Jerusalem.

Also Wednesday, Palestinian Cabinet Minister Nabil Shaath said that secret talks between Arafat's representatives and the militant Hamas to forge an end to homicide bomb attacks in Israel have failed. He blamed Hamas for "sabotaging every effort," but said the efforts would continue. Arafat has publicly condemned the suicide attacks.

Before the violence late Wednesday, a key Palestinian official was indicted in and Israeli civilian court on charges of murder and attempted murder in connection with the two-year Palestinian uprising. Marwan Barghouti, the West Bank leader of Arafat's Fatah movement, insisted he was innocent and both sides looked prepared to use the trial as an indictment of the other.