Saudi police killed a suspected Islamic militant and arrested three others Sunday in a shootout in a suspected terror cell hideout in the Red Sea city of Jiddah (search) that also left one woman bystander dead.

The Interior Ministry said one of those detained, who was also wounded in the morning gunfight, had been sought after by security forces for belonging to the "deviant group," a term commonly used by Saudi authorities to refer to Usama bin Laden's (search) Al Qaeda terror network.

The clash was the latest in a 2-year-old crackdown on Islamic militants by the Saudi monarchy, which has been struggling to end bombings and terror attacks on security and Western targets in this oil-rich Gulf kingdom.

Police exchanged gunfire with the suspected militants, who were holed up in a residential apartment building in Jiddah's Rabwa district, the Interior Ministry said in a statement carried by the official Saudi Press Agency.

A woman was wounded in the crossfire and later died in hospital, while her husband and 13 other policemen were also injured in the shootout, which was followed by security forces storming the building and exchanging gunfire with militants inside.

Arab TV footage showed white painted walls of the building pockmarked with bullet holes while shards of glass from shattered windows were scattered over the ground.

It was not immediately clear what the wanted man was suspected of connection to. Initially, police officials said on condition of anonymity the shootout occurred in a street after gunmen drove through a traffic light and shot at police.

As a result of the shootout, the U.S. consulate general in Jiddah announced it was postponing its Independence Day celebration, originally scheduled for March 14, but will remain open for normal business. The U.S. Embassy and consulates in the Kingdom traditionally host such celebrations in the spring or fall rather than on July 4 due to Saudi's hot summer weather.

Last week, the U.S. Embassy warned American citizens living in Jiddah's Sierra Village residential compound to be on high alert, prompting some Americans living in the tightly secured compound to leave.

Worries in Jiddah have been particularly high since the U.S. consulate was attacked Dec. 6 and five foreign consulate employees were killed plus four attackers in the ensuing gunfight between militants and Saudi security forces.

Saudi Arabia (search) has been waging a nationwide crackdown to root out terrorism ever since Al Qaeda-linked militants attacked three residential compounds in Riyadh in May 2003. Earlier this month, Saudi officials said they have detained 700 terror suspects thus far, including 18 of the 26 most-wanted men in the kingdom. Numerous suspects also have been killed in raids or clashes.

A report released early this year by the Washington-based Center for Strategic and International Studies said despite the successes and decreasing support for Al Qaeda in Saudi Arabia, "the terror threat is unlikely to disappear for years to come."