A Palestinian gunman opened fire on an Israeli construction crew before he was shot dead Wednesday — the second such attack in two days.

The gunman fired at tractors near Kfar Zita on a highway along the mostly unmarked frontier with the West Bank, and was killed by guards.

The attacks came as a dispute over funding for settlements pushed Prime Minister Ariel Sharon's coalition to the verge of collapse. Sharon's last minute talks with the Labor Party ahead of the budget vote failed to resolve the crisis and Labor ministers submitted their resignation. Labor had demanded a $145 million cut in settlement spending.

In the Tuesday night attack, the gunman crawled under the perimeter fence of the small West Bank settlement of Hermesh and killed two teenage girls and a woman at home with her husband, said Tzipi Kaliski, a Hermesh resident.

"He (the gunman) saw the girls who had just walked out of the house...and he started shooting at them," Kaliski said.

Soldiers stationed in Hermesh heard the shooting and came running and killed the gunman, she said. The Al Aqsa Martyrs' Brigade, a militia affiliated with Yasser Arafat's Fatah movement, claimed responsibility for Tuesday evening's shooting.

Palestinian militants have repeatedly infiltrated Jewish settlements and attacked Israeli motorists in the West Bank and Gaza, part of a campaign to drive settlers from the lands Palestinians claim for their future state.

Palestinians have claimed that settlers are legitimate targets in their struggle for statehood, living on land they claim for a future state. About 200,000 settlers live among 3 million Palestinians in the West Bank and Gaza.

Arafat's new interior minister, Hani al-Hassan, said Wednesday he would carry out the Palestinian Authority's decision to prevent attacks inside Israel but excluded settlers from the policy. Al-Hassan argued that most settlers are armed. In the Gaza Strip, Israeli troops raided the town of Beit Hanoun and arrested at least five suspected militants, the army said in a statement. Palestinians said 15 people were rounded up in house-to-house searches.

In Jenin the army lifted the curfew for four hours, the first time since troops moved into the West Bank town last Friday morning.