Israeli soldiers killed six Palestinians in fierce confrontations in the West Bank and Gaza, underscoring what Defense Minister Mr Binyamin Ben-Eliezer called a "gloves-off" policy towards Palestinians.
"We have started to respond. There had been a policy of restraint...which in my view is over," Mr Ben-Eliezer told Israel's Channel Two television after the bloodiest day in Palestinian areas in months.
Passions were inflamed by a week of Palestinian bomb attacks, Israeli missile strikes on security targets in Gaza and the West Bank, and demands by U.S. President Bush that the Palestinians in particular do more to halt the violence.
"I am trying to make the other side understand it would be worthwhile to return as quickly as possible to the negotiating table and that it will achieve nothing through violence, which I will fight," Mr Ben-Eliezer said.
But he added, "if you think we have a magic formula - we don't."
Stepping up pressure on Palestinian President Mr Yasser Arafat, Israel banned his Gaza-based ministers from crossing its territory to attend a weekly cabinet session in the West Bank, forcing the meeting's cancellation.
The Palestinian government nonetheless issued a statement accusing Prime Minister Ariel Sharon's government of committing "a brutal and shameful crime against Palestinian people who took to the streets" in the latest protests.
The unrest also coincided with largely peaceful "Land Day" rallies by Israeli Arabs on the 25th anniversary of the killing of six of their brethren by Israeli security forces during demonstrations against government expropriation of their land.