TEL AVIV, Jan 16: Israel has "marked for death" Hamas spiritual leader Ahmed Yassin, following a suicide bombing that killed four Israeli soldiers in Gaza, Israel's deputy defence chief said on Friday.

The wheelchair-bound leader attended Friday prayers as usual at a mosque near his Gaza City home and told reporters he would embrace "martyrdom". A Palestinian minister said Israel was playing with fire by making the threat.

Hamas claimed responsibility for Wednesday's bombing by a Palestinian mother of two at a border industrial zone. It killed three soldiers and a security officer, further undermining chances of reviving a US-backed peace plan.

"He is marked for death and he had better dig deep underground, where he won't be able to tell the difference between day and night," Deputy Defence Minister Zeev Boim said of Sheikh Yassin.

"We will find him in his tunnels and liquidate him," he told Army Radio.Palestinian minister Saeb Erekat said: "Escalating the Israeli policy of assassinations will... lead to more escalation and a widening of the cycle of violence, bloodshed and chaos."

Sheikh Yassin survived with only a slight hand injury an Israeli assassination attempt in September, when a warplane bombed a Gaza building just as he and other Hamas leaders were leaving.

On Thursday, Prime Minister Ariel Sharon's deputy, Ehud Olmert, threatened renewed military strikes on Palestinian militants "planning or setting in motion acts of murder".

Along with a steep drop in suicide bombings in Israel, the army has scaled back its attacks on Hamas leaders after a series of largely failed attempts to kill them in the summer.

Israeli officials say army raids and a controversial barrier in the West Bank are responsible for the relative lull in attacks inside Israel. But there has been much speculation about a de facto ceasefire with Hamas, which both sides deny.

"I repeat that there is no room to speak about a truce," Sheikh Yassin, surrounded by bodyguards, said outside the Gaza mosque. "Resistance must continue, until the removal of the occupation."

Asked if he feared for his life, he replied: "They have tried to kill Sheikh Ahmed Yassin before... I would like to say to them: We do not fear death threats. We are seekers of martyrdom."

He said Israel knew he had "nothing to do with military activity" carried out by Hamas's armed wing. In Wednesday's bombing, Reem al Reyashi, 22, detonated her explosives belt during a security check inside the Erez crossing terminal on the Gaza-Israel border. Reyashi, from a prominent merchant family, left behind a three-year-old son and a daughter aged one.

It was the first time Hamas, behind dozens of suicide attacks in Israel, has used a woman bomber. The group said it did so because of toughened Israeli security obstacles facing its male bombers.

"She started asking (to carry out a bombing) before she was married and then pursued her request after she gave birth to her first and second babies," a Hamas source said.

Reyashi's brother said her family had been unaware of her intentions. "We were shocked," he said, calling the bombing "an act of honour". -Reuters