An eyewitness said soldiers stopped a car and asked the young man to get out. He did and then he blew himself up, reports CBS News correspondent Robert Berger.
The Arabic satellite station Al-Arabiya reported that Syrian-backed militant group Islamic Jihad claimed responsibility for the bombing. The report could not be confirmed, but the group earlier this week rebuffed Palestinian leader Mahmoud Abbas' appeal for an end to suicide bombings and rocket attacks.
It's a blow to a fragile 10-month-old cease-fire that is due to expire on Saturday, reports Berger.
In increasingly chaotic Gaza, meanwhile, Palestinian police were searching for a British human rights worker and her parents, kidnapped at gunpoint in the southern Gaza town of Rafah on Wednesday — and a gunfight erupted between two feuding families in Gaza City. A policeman and one of the family members were killed, hospital officials said.
The suicide bombing took place just south of the Palestinian town of Tulkarem, about two miles inside the West Bank. The army had set up roadblocks in the area shortly after receiving warnings that a suicide bomber was headed toward Israel.
The army said the bomber, an accomplice and the taxi driver were killed, along with a 21-year-old Israeli army officer, Lt. Uri Binamo. Seven Palestinians and three soldiers were wounded.
Palestinians identified the attacker as Ala a-Sadi, a 23-year-old Palestinian police officer from the northern West Bank town of Jenin whose family had links to Islamic Jihad. There was pandemonium at the family home, where relatives were trying to call a-Sadi on his cell phone with no success. No militant group released the name of the bomber, as has been the practice in the past.
Israel's deputy defense minister, Zeev Boim, blamed local Islamic Jihad operatives with direct support from the group's leadership in Syria.
"Their efforts to put suicide bombers in the center of Israel are always ongoing," he told Israel Radio, praising the army for foiling what could have been a much worse attack.
Islamic Jihad has carried out all six suicide bombings since Israel and the Palestinians declared a cease-fire last February. Israel has been targeting Islamic Jihad leaders in arrest raids in the West Bank and airstrikes in Gaza.
Palestinian official Saeb Erekat condemned the bombing and called on all groups to honor the cease-fire. "The Palestinian Authority is committed to the cessation of violence," he said.
Violence in Gaza has increased since Israel pulled out in September, destroying its 21 settlements. Israeli artillery shelled northern Gaza for a second day after declaring a six square-mile area next to the border a "no-go" zone, an attempt to stop a rash of rocket firing by Palestinian militants.
Al Qaeda in Iraq, meanwhile, claimed it fired a barrage of rockets into northern Israel from Lebanon on Tuesday. The claim, on an Islamic Web forum where the group often posts statements, could not be independently verified.
It apparently was the first time al Qaeda in Iraq claimed responsibility for a direct attack against the Jewish state. The rockets landed in a residential neighborhood of the northern Israeli town of Kiryat Shmona, causing damage but no casualties.
In August, al Qaeda in Iraq said it was behind a rocket attack in the Jordanian port city of Aqaba that killed a Jordanian soldier. One of the three rockets in the assault landed in neighboring Israel, causing no casualties .
Al Qaeda also claimed responsibility for the November 2002 suicide bombing of a hotel frequented by Israelis in Kenya that killed 15 people, including three Israelis. The same day, al Qaeda militants tried to shoot down a chartered Israeli plane leaving a nearby airport.
Israel had blamed Tuesday's rocket attack on a radical Palestinian militia and bombed one of its bases near Beirut. Israeli officials would not immediate comment on the al Qaeda statement.
The U.S. State Department said it could not corroborate the al Qaeda claim, but spokesman Adam Ereli said the attacks underscored the need "for Syria and Iran to stop funneling arms and training and support to terrorist groups in southern Lebanon."
In Gaza, Palestinian officials and militant groups condemned Wednesday's abduction of British aid worker Kate Burton, 25, and her parents, but were unable to find the kidnappers or the victims.
"We are continuing our search efforts, and we will not stop until the British family is safely returned," said Gaza police chief Alaa Hosni. Palestinian security set up roadblocks in Rafah and the nearby town of Khan Younis to inspect traffic moving through the area.
The kidnapping was the latest in a string of abductions of foreigners in recent months. In most cases, the kidnappers sought jobs in Palestinian security forces, the release of imprisoned relatives or other personal matters. In all cases, the victims were released unharmed.
Abbas' critics have accused him of giving in to kidnappers' demands, encouraging more abductions.