Muslim extremists in long white robes attacked a children's festival at a U.N.-run elementary school with guns and homemade bombs Sunday, killing a politician's bodyguard in plain view of terrified youngsters — just the latest incident of lawlessness engulfing the Gaza Strip.

The new Palestinian unity government, formed two months ago, appeared powerless to end growing clan fighting, kidnappings and attacks by shadowy extremist groups on foreigners, music shops and Internet cafes.

Hours after Sunday's attack, which also left seven people wounded, moderate Palestinian President Mahmoud Abbas of Fatah and Prime Minister Ismail Haniyeh of Hamas were meeting in another attempt to put together a security plan.

Interior Minister Hani Kawasmeh, the author of the plan, has threatened to resign because security commanders refuse to cooperate with him, mainly because of rivalries between coalition partners Hamas and Fatah.

In Palestinian-Israeli violence on Sunday, two Israelis were seriously wounded. A security guard for a tanker truck was wounded in a drive-by shooting in the West Bank, and the other was hurt by a rocket fired from Gaza. The rocket exploded near a gas station next to the town of Sderot, a frequent target of rockets from Gaza.

In other violence, a grenade was thrown in the northern Israeli city of Nahariya at sunset Sunday, police said, and one person was wounded. Police said it was apparently a criminal attack.

Nahariya, not far from the Lebanon border, was hit hard by rockets fired from Lebanon during last year's war between Israel and Hezbollah guerrillas.

New statistics, meanwhile, illustrated the sharp increase in internal violence in Gaza.

In the first three months of this year, 147 Gazans, including 10 children, were killed by fellow Palestinians, according to the Palestinian human rights group Al-Mezan. By comparison, 57 people died in factional fighting in all of 2004, followed by 101 in 2005 and 252 last year.

If the upward spiral isn't stopped, Gaza could become ungovernable, warned Ibrahim Ibrach, a political scientist at Gaza's al-Azhar University. "The collapse of the Palestinian Authority ... is at stake," he said.

Sunday's attack on the U.N. school in the southern Gaza refugee camp of Rafah began with a protest by Muslim extremists in long robes, who said a sports festival the school was hosting was un-Islamic. The U.N. "is turning schools into nightclubs," read one sign held up by the protesters.

At one point, the group tried to enter the school. Palestinian security fired in the air to keep them away. In the ensuing chaos, at least one bomb was thrown into the school, and a gun battle followed.

A senior Fatah official, Majed Abu Shamaleh, was leaving the school when his bodyguard was killed. Seven people were wounded, most by bomb fragments. Some children hid under their chairs during the fighting.

The top U.N. official in Gaza, John Ging, was in the school at the time of the attack. He was not hurt. The protesters accused him of leading a movement to weaken people's Islamic faith.

In March, Ging escaped an assassination attempt when gunmen fired at his convoy. Ging was saved from harm by bulletproof windows in his vehicle. Later that month, BBC journalist Alan Johnston was kidnapped outside his Gaza City apartment, and is still being held. Gaza is now largely empty of foreigners.

Abu Shamaleh said the shooting appeared to be carried out by the same extremists who have been behind a string of bombings of Internet cafes and pool halls in Gaza.

Police said they arrested two of the gunmen and were interrogating them. Later, the extremists tried to approach the police station where the two suspects were being held, to release the men. Police and gunmen from militant factions surrounded the station to prevent the extremists from entering, witnesses said.

Ghazi Hamad, spokesman for the Hamas-controlled prime minister's office, said the shooting showed the importance of Hamas and Fatah reaching a security deal.

"This is our first priority ... nobody has the right to use guns to deal with their problems," Hamad said.

The Hamas-Fatah coalition had been established, in large part, to halt months of factional fighting in Gaza. However, tensions between the two factions are rising again, fueled by the government's failure to throw off international sanctions.

Samir Zakkout, author of the Al-Mezan report on Gaza deaths, said he wasn't optimistic.

"Until when can this government continue without any justification for its existence? People aren't safe," he said. "The increasing lawlessness is putting this government at a crossroads: to be or not to be?"