Palestinian militants called off a tattered two-month-old truce on Thursday after an Israeli helicopter killed a senior Hamas political leader with a volley of missiles. Tens of thousands of Hamas supporters marched in protest through the streets of Gaza, vowing revenge.

According to aides, Palestinian Prime Minister Mahmoud Abbas (search) had ordered a major crackdown and drew up lists of militants to be arrested, but scrapped the plans after the assassination.

Israel said it could not wait any longer for the Palestinians to act after a Hamas bus bombing that killed 20 people, including six children, in Jerusalem. Gideon Meir, a Foreign Ministry official, said the Palestinians should have moved faster.

"If there had been a will ... of the Palestinian leadership to really take action, they could have done it in an hour, two hours after the horrific terrorist attack," he said.

About a dozen Israeli tanks and armored personnel carriers moved into Jenin in an apparent arrest raid late Thursday, the second night of incursions into West Bank (search) towns hunting for militants.

The escalating violence posed the most serious threat yet to the U.S.-led "road map" peace plan, launched three months ago. Secretary of State Colin Powell (search) warned that "the end of the road map is a cliff that both sides will fall off of" and urged them to pull back.

That appeared unlikely after Tuesday's bus bombing and the missile strike. In the Gaza Strip, tens of thousands of Hamas supporters took to the streets after evening prayers Thursday in a massive show of strength. Gunmen fired in the air and about 15 men marched in long robes -- a signal that they are willing to become homicide bombers.

The target of the Israeli rocket attack Thursday was Ismail Abu Shanab, 53, a prominent Hamas spokesman and U.S.-educated engineering professor who was considered one of the more pragmatic members of the group and who pushed the movement to call their truce on June 29. Israel said he was involved in terror attacks, including the Tuesday bus bombing.

The militants' unilateral cease-fire had quelled violence for several weeks, though there had been three homicide bombings in the past two weeks -- including the Jerusalem bombing.

An Israeli helicopter fired five missiles at Abu Shanab's white station wagon as it slowed down for a speed bump on one of Gaza's busiest streets. Fire and smoke engulfed the car and Abu Shanab's scorched, decapitated body hung from the driver's side window.

Two Abu Shanab bodyguards were also killed, and 15 bystanders were hurt.

The White House stopped short of saying the Israeli retaliation was justified. "Israel has a right to defend herself but Israel needs to take into account the effect of the actions they take on the peace process," said press secretary Scott McClellan, who was accompanying President Bush on a flight to Oregon.

Sheik Ahmed Yassin, the Hamas founder, said the truce was off. The smaller Islamic Jihad group and renegades from Yasser Arafat's Fatah movement joined in the announcement.

In a warning to Israelis, Yassin said: "You will pay the price for the crimes of [Israeli Prime Minister Ariel] Sharon." In Beirut, the group said in a statement that "our response to this despicable crime will, God willing, be earthshaking."

Hamas, which has killed hundreds of Israelis in scores of bombings, usually follows through on its threats. In an early response Thursday, it fired 15 mortal shells at Jewish settlements and army outposts in the Gaza Strip. At least one round hit a house, damaging the roof and a porch.

Palestinians in the Gaza Strip also fired four homemade rockets at Israeli towns Thursday night, the army said. No one was reported injured.

Hamas claimed responsibility, and officials said Israeli troops in two armored vehicles closed the main road linking northern and southern Gaza Strip.

A spokesman for Palestinian security chief Mohammed Dahlan said security forces were working on the details of a Palestinian crackdown of militant groups.

The spokesman, Elias Zananiri, said the Palestinian government had told the United States, Egypt and Jordan of its plans for a crackdown, and believed the Israelis were also aware of the plan. "Everybody was put on alert and everybody was told we're heading to a showdown," he said.

Palestinian Prime Minister Mahmoud Abbas denounced the missile strike as an "ugly crime," and his information minister, Nabil Amr, accused Israel of sabotaging the Palestinian Authority's attempts to rescue the truce and implement the road map.

In New York, meanwhile, Powell said after meeting U.N. Secretary-General Kofi Annan that Arafat should make security forces under his control available to Abbas so that the prime minister has authority over all security forces.

The Palestinian leader has been confined by the Israeli army to his partially destroyed compound in Ramallah for nearly two years.

After Thursday's missile strike, 12 militants wanted by Israel were released from the compound, one of the fugitives said.

The Israelis decided to act after giving the Palestinians more than 24 hours and seeing no sign of significant action planned against militants, a security source said on condition of anonymity. "We were waiting to see even just one Hamas arrest," the source said.

By early Thursday, troops had raided three West Bank towns -- Nablus, Jenin and Tulkarem -- and killed a 16-year-old bystander in a search for fugitives in pool hall.

The largest operation was carried out in Nablus, where armored vehicles sealed off the old city, or Casbah, as troops searched homes and took over several buildings. The military said it found a bomb lab in Nablus and blew it up, and arrested more than a dozen Palestinians.

"The Palestinians have to take a strategic decision," said Israeli Foreign Minister Silvan Shalom. "Are they willing to fight terrorism? Are they willing to fulfill their commitments in the road map to break up the terror infrastructure? ... When they don't do this, we have no choice but to do it instead."

After the truce declaration, Israel had scaled back raids and suspended targeted killings in an apparent effort to avoid being blamed for a collapse of the road map. At the time, the United States showed understanding for Abbas' plea for more time to handle the militants without force, since the truce initially led to a sharp decline in violence.

Israel was deeply suspicious of the truce from the start, saying it was a ploy to win time and allow terror cells to recover from relentless Israeli strikes. The Israeli military noted Thursday that 25 civilians, including Israelis, a Bulgarian worker and five Americans, were killed and 160 others wounded in attacks in the past two months, before the militants formally abandoned the cease-fire Thursday.