Israel seized Palestinian deputy Prime Minister Naser al-Shaer, a top official of the Hamas militant group, at his home in the occupied West Bank today.
Israel has more than two dozen Hamas lawmakers and several other cabinet ministers in custody since late June, after it launched an offensive in response to the kidnapping of a soldier in a cross-border raid from the Gaza Strip.
An Israeli army spokesman confirmed troops had taken al-Shaer into custody, saying it was "due to his membership in a terrorist organisation."
Palestinian Prime Minister Ismail Haniyeh condemned the arrest.
"Israel's aims to undermine the Palestinian political system and to put obstacles before the government and the people ... This is blackmail but we are determined to continue our march," Mr Haniyeh said.
Mr al-Shaer's wife, Huda, said he was picked up at their home in the West Bank town of Ramallah.
She said that "several jeeps circled the house before dawn" then troops came to the door.
An officer told her after checking their identity documents, "'sorry madame, but your husband has to come with us. He let him first say goodbye to our four children," Ms al-Shaer said.
Two lawmakers from Hamas, a militant group that seeks Israel's destruction and swept to power in the Palestinian Authority in March elections, also confirmed al-Shaer had been seized by Israeli forces.
Saeb Erekat, the top Palestinian negotiator, condemned the arrest and said "this complicates" a recent bid by Palestinian President Mahmoud Abbas to forge a Palestinian unity government, to ease a Western aid embargo against the Hamas government.
The boycott is designed to push the militant group to recognise Israel's right to exist, renounce violence and accept past peace accords.
Israel seized dozens of Hamas cabinet ministers and lawmakers after militants abducted Corporal Gilad Shalit on June 25th. Many were later freed. Mr Al-Shaer had been on the wanted list but had not been found, Palestinian sources said.
Violence has continued in the West Bank and Gaza during Israel's month-long war with Hizbollah guerrillas in Lebanon. A six-day-old ceasefire in the war in Lebanon has largely held.
Israeli troops killed three Palestinian militants on Friday, while three Palestinians from Hamas's armed wing died as they prepared a bomb in the town of Jenin, local security officials said.
Later an Israeli soldier was shot dead by a Palestinian gunman.
Meanwhile in Lebanon, an Israeli soldier was killed and two were wounded in a commando raid on a Hizbollah stronghold in the east of the country.