Israel barred a Palestinian delegation from attending a Mideast conference in London and decided to close three Palestinian universities Monday -- a relatively muted response to the deadliest suicide attack in nearly a year.

Bombings on the scale of the twin blasts in Tel Aviv on Sunday -- 22 killed and more than 100 wounded -- in the past triggered major Israeli military offensives.

But Prime Minister Ariel Sharon's options for retaliation are increasingly limited, with Israel's general election only three weeks away and the United States eager to keep a lid on Mideast violence ahead of a possible strike against Iraq.

In Gaza early Tuesday, A Palestinian civilian in a car was shot and killed by Israeli forces operating near the Mughazi refugee camp, and soldiers tore down two empty buildings at the edge of Khan Younis, Palestinians said. The Israeli military had no immediate comment.

An offshoot of a militia linked to Yasser Arafat's Fatah movement claimed responsibility for Sunday's bombings, prompting new Israeli accusations that the Palestinian leader encourages and even orders attacks on Israelis.

The Palestinian Authority condemned the bombings and denied any involvement, while Fatah tried to distance itself from the Al Aqsa Martyrs' Brigade, a militia with ties to the bombers. A spokesman for the Al Aqsa offshoot responsible for the blasts said his group has been receiving money from Iran and would not heed demands by Palestinian Interior Minister Hani al-Hassan to stop attacks in Israel.

Israel's security Cabinet, meeting early Monday, did not order Arafat's expulsion, seeking to avoid friction with Washington ahead of a possible U.S.-Iraq war. However, Finance Minister Silvan Shalom, a member of the security Cabinet, said he expected Arafat will eventually be ousted from the West Bank.

"For the time being ... we have to get through the Iraq crisis and after that maybe get to more far-reaching steps," Shalom said on Israel TV. "Arafat is mixed up in terror."

The two bombers, residents of the West Bank city of Nablus aged 19 and 20, blew themselves up in an old area of Tel Aviv crowded with foreign workers. The explosions ripped through a Chinese takeout restaurant, a pub and several shops.

Among the dead were at least 11 Israelis and six foreign workers, including citizens of Romania, Bulgaria and Ghana. Five bodies were still not identified Monday evening. It was the deadliest bombing since March, when 29 hotel guests were killed in an attack on the eve of the Jewish Passover holiday.

The Passover attack led to a major Israeli military offensive, "Defensive Shield," in which Israel reoccupied West Bank towns, rounded up thousands of Palestinians and laid siege to Arafat's headquarters for 34 days.

Israeli troops have moved in and out of Palestinian population centers since then and currently control all but one West Bank town.

In response to the Tel Aviv bombings, Israel barred a Palestinian delegation from leaving for a London conference that was to be held Jan. 13 and 14 to discuss a possible truce and Palestinian reform. Foreign ministers of Britain, Greece, Jordan, Saudi Arabia were to have attended, while Israel was not invited.

Palestinian Cabinet minister Saeb Erekat said Israel's decision was shortsighted. "I think it's like someone shooting himself in the foot," Erekat said. "How can such a decision give Israelis more security?"

Israeli media have reported that Sharon was upset with British Prime Minister Tony Blair for refusing to see Israel's foreign minister, Benjamin Netanyahu, who was in London last week, while agreeing to host dovish Israeli opposition leader Amram Mitzna in London on Thursday.

British Foreign Secretary Jack Straw called Netanyahu on Monday, asking that Israel reconsider the decision to ground the Palestinian delegation, Netanyahu's office said. Netanyahu declined.

"We will not engage in a sham because to enable these people (the Palestinian delegates), after these horrors, to go to London with the purposes of a mock reform is to help spread their deception," Netanyahu said.

Sharon adviser Raanan Gissin, meanwhile, said the security Cabinet decided in principle to shut down three Palestinian universities -- a measure last taken during the first Palestinian uprising from 1987-1993.

Gissin initially named Bir Zeit and An Najah universities -- the West Bank's most prestigious and largest institutions of higher learning, respectively -- as those likely to be shut. However, Gissin later said that Israel had not yet completed the process of collecting evidence, and a final decision on which universities to close had not been made. Both were closed for extended periods by the Israeli military in the first uprising as alleged hotbeds of revolt. Gissin did not name a third university.

Officials at both universities said they have not received closure orders.

In a third step, Israel decided to prevent the 120-member Palestinian Central Council from meeting Thursday in Ramallah and to impose travel restrictions on senior Palestinian Authority officials. The Central Council, a key decision-making body, was to have reviewed a first draft of a Palestinian constitution, which is being put together as part of a reform package sought by the United States.

Gissin said Israel will also increase "pinpoint" attacks, meaning it will hunt down and kill Palestinian militants -- acts which the Palestinians condemn as assassinations.

"They violated the trust so we have the right to take such defensive measures to make sure that such horrible terrorist activities don't take place," Gissin said.

In the past, waves of Palestinian terrorism have helped hard-line parties in Israeli elections. With voting set for Jan. 28, Sharon's Likud Party, hit hard by a corruption scandal, stood to gain. However, the proximity of the election also worked against a tough response, which would be seen as electioneering.