Israeli soldiers reoccupied part of the Gaza Strip on Friday, surrounding houses of Palestinians, setting up military posts and digging trenches in the most significant Gaza seizure in 29 months of fighting.

In the past, soldiers would withdraw from Gaza after hours or days, but Israel says its takeover of the crowded four-square-mile area is open ended.

The Gaza operation — aimed at preventing Palestinians from firing small, homemade Qassam rockets at Israeli border towns — began before dawn. About 100 tanks rumbled into the area ringed by the Palestinian towns of Beit Hanoun, Beit Lahiya and the Jabaliya refugee camp.

"They called to us over loudspeakers to get out and then they searched all the buildings using dogs," said Mansour Abu Hamad, a 33-year-old lawyer who lives in Beit Lahiya.

The reoccupation came as Mahmoud Abbas considered Yasser Arafat's offer to become the first Palestinian prime minister. The choice of Abbas, the deputy PLO chief, could signal that Arafat has given up on the idea of appointing a politically weak prime minister.

Earlier in the week, Arafat had been considering Monib al-Masri, a Palestinian billionaire without political clout, for the job. International mediators have pressured Arafat to create the position to make him share power and reform the Palestinian government.

"I will be able to respond ... when it becomes clear what kind of authorities the prime minister will have," Abbas told The Associated Press.

Abbas has a strong political following and is known as a moderate. He has publicly called the violent Palestinian uprising a mistake and urges a return to peace negotiations with Israel.

The PLO's Central Council will meet this weekend to approve the idea of creating the position, and the Palestinian legislature will convene next week to define the responsibilities of the new post.

Also Friday, the military wing of Hamas claimed responsibility for Wednesday's suicide bombing in the northern city of Haifa that killed 14 Israelis and one American. The group said the attack was in retaliation for Israel's occupation in Gaza and the West Bank.

"This retaliation is the beginning of a series of attacks," said the Hamas statement, faxed to AP in Jordan.

Fifteen Palestinians were wounded in Gaza's reoccupied zone Friday. Palestinians said the injured were hit by Israeli tank fire. The army denied firing tank shells and said the Palestinians were wounded by a firebomb thrown by Palestinians.

Israeli troops were digging deep trenches in the seized area and blocked roads. Warning shots were fired at some farmers, whose land and orchards were bulldozed. Troops said some of the farms were being used as cover by Palestinians to fire the rockets at towns.

"We are holding a large area from which Qassam rockets have been launched recently, including in the last two days," said the officer in charge, Col. Yoel Strick. He said the Israeli presence was open-ended and that the boundaries of the area being seized could change.

Asked by reporters if Israel was reoccupying the area, he said: "Yes, indeed."

Palestinian officials said about 6,000 Palestinians live in the seized area, most in Beit Lahiya, which is closest to the border fence with Israel. About 40 tanks and military vehicles were parked Friday on a sandy hill overlooking Beit Lahiya and Jabaliya. Troops took over a former Palestinian police base and an elementary school, witnesses said.

Strick, the Israeli commander, said residents were not restricted in their movement.

The seizing of parts of northern Gaza marked a further increase in Israeli operations in the strip that escalated Feb. 15, when Hamas blew up a tank in the area, killing four Israeli soldiers. Dozens of Palestinians have been killed in Israeli incursions since then.

Israel withdrew from about two-thirds of Gaza in 1994 under an interim peace agreement. After the outbreak of fighting in September 2000, troops slowly re-entered some Palestinian areas, widening positions, especially along main roads.

Elsewhere in Gaza on Friday, three Palestinians were killed after firing at a convoy of Jewish settlers, the army said. Soldiers escorting the convoy returned fire, killing the assailants, which the militant Islamic Jihad group claimed as members.

On Thursday, several Qassam rockets were fired from Jabaliya toward the Israeli border town of Sderot, causing no damage or injuries. The rocket fire was a response to an Israeli sweep through Jabaliya earlier in the day that left 11 Palestinians dead and more than 140 wounded.

That raid, in turn, came a day after a Hamas militant blew himself up on an Israeli bus in the northern port city of Haifa, killing 14 Israelis and an American teenager.