SDEROT, June 28: Two Israelis, including a three-year-old boy on his way to nursery school, were killed on Monday when the Hamas group carried out its first-ever deadly rocket attack on the Jewish state.

The deaths in the southern town of Sderot brought the toll from a flare-up in Israeli-Palestinian violence to seven - four of them Palestinians - in less than 12 hours from five separate incidents.

A third Israeli died in an explosion carried out by Hamas underneath an army observation post in southern Gaza. The spike in violence also punctured optimism among the Israeli leadership that they had managed to bring Palestinian militant groups to heel after one of the longest periods of relative calm in the region since the September 2000 start of the intifada.

Around a dozen other people were wounded when four Qassam rockets, named after the military wing of Hamas, landed in Sderot. The second fatality was a middle-aged male. Palestinian militants have fired more than 300 Qassam rockets at Sderot and other areas in southern Israel since February 2002, but they had never before caused fatalities.

On Monday, however, one of the rockets landed right in the heart of this town of 24,000 residents, just five metres from the entrance to the Gan Lilach nursery school. One of the teachers said the youngster who was killed in the blast normally came to school earlier. The boy's mother was also severely wounded.

"He normally comes at about 7:20 am but today his mother brought him a little bit later. He was such a good little boy," said Francine Zerbib, before bursting into tears.

Mimi Shushan, who works in another nearby nursery, said she had shepherded her children into a bomb shelter after the blast. "I saw the mother (of the dead child) lying on her back, looking around in shock and her son was thrown across here with his arm cut off. There was loads of blood everywhere," she said.

Israeli government spokesman Jonathan Peled said the attacks on Sderot and the army post showed the Palestinian Authority was failing to "keep the lead" on hardline groups such as the Islamist movement Hamas.

"Obviously they are becoming more and more daring and sophisticated," he added. Hamas's armed wing, the Ezzedine al-Qassam Brigades, said in a statement that four Qassams had been fired which had "reached their targets by causing the deaths of two Zionists (Israelis) and wounding others."

The movement had earlier claimed responsibility for the attack on the army post near the Gush Katif settlement bloc in southern Gaza. One Israeli soldier was killed and five wounded, one seriously, when Palestinian militants set off a massive explosion in a tunnel they had dug underneath the position, the army said.

Explosives were detonated under the post in a tunnel several hundreds of metres long, trapping some of the soldiers in rubble. Hamas said the attack was in revenge for Israel's assassinations earlier this year of the movement's founding leader Sheikh Ahmed Yassin and his successor Abdelaziz Rantissi.

Two Palestinians, including a 13-year-old boy, were shot dead by Israeli troops in the nearby town of Khan Yunis shortly after the attack as troops based at another post opened fire.

Two other Palestinians, including a 42-year-old lorry driver, were also shot dead by troops on Monday morning in separate incidents in southern Gaza. Following the flareup, Israeli Prime Minister Ariel Sharon convened a meeting with his top security chiefs where they decided on a response to the two attacks.

No details were released about the decision which was taken during a two-hour meeting attended by Defence Minister Shaul Mofaz, army chief of staff, General Moshe Yaalon, military intelligence chief Aharon Zeevi Farkash, and the head of the domestic Shin Beth security services.

Sharon is planning to pull all troops and the 7,500 Jewish settlers out of Gaza by the end of next year. But a spokesman for the Sderot municipality said the situation would worsen if the pullouts are given parliamentary approval.

"If the disengagement plan is passed there is no doubt that it will make the situation much worse," spokesman Yossi Cohen told AFP. The two deadly Hamas attacks have given a major boost to the credentials of a militant movement which has been struggling to shake off the impact of the assassinations of Yassin and Rantissi.

On Sunday, Mofaz told the cabinet that "pressure on the main terror organisations through arrests and the thwarting of terror attacks, striking at the leadership and centres of terrorism" had led to "a continued decline in the level of terror". -AFP