Hours later, Israeli helicopters fired two missiles at a small, empty house near the beach in Gaza City early Sunday, and helicopters also fired missiles in a Gaza refugee camp, witnesses said.
The house is near the Gaza beach and Palestinian leader Yasser Arafat's residence, the witnesses said. Arafat has not been in Gaza for nearly two years.
The house belonged to the Kamita family, one of Gaza's largest, but it was empty at the time of the attack. Mohammed Kamita, a member of the family, said it had been uninhabited for a long time. There was no furniture in the house.
Ambulances arrived at the scene, but there were no casualties. Large crowds of people gathered at the scene, witnesses said.
The large family has representation in all of the main Palestinian groups, including the violent Hamas and Islamic Jihad, Palestinians said.
A few minutes later, Israeli helicopters fired three missiles at a house in the Boureij refugee camp in central Gaza, residents said. The house belonged to an Islamic Jihad leader, Morshet Shahin, but residents said he escaped the attack. No casualties were reported.
The attacks followed a meeting between Israeli Prime Minister Ariel Sharon and top military and security officers, discussing a response to the suicide bombing. No decisions were announced.
In the past, Israel has responded to Palestinian bombing attacks by targeting leaders of violent Islamic groups for killing.
The lunchtime attack in Haifa, which wounded at least 55, both Arabs and Jews, ended nearly a month of relative calm. One of the deadliest in three years of violence, the bombing came on the Jewish Sabbath and a day before the start of Yom Kippur, the holiest day of the Jewish calendar.
President Bush, who has opposed Arafat's expulsion, condemned "the despicable attack" and said Palestinian authorities must take responsibility for stopping terrorism. Arafat supporters appealed for international intervention to guarantee his safety.
The blast at the Maxim restaurant, co-owned by Arabs and Jews, went off shortly after 2 p.m. local time, shattering windows and leaving the white walls cracked and charred black. Most of the ceiling had collapsed, with lights and wires dangling.
Broken plates, glass, chairs and human remains covered the floor of the one-story building. Outside, the body of the restaurant's security guard lay broken and bloody on the steps.
Police said the bomber and 19 bystanders were killed. A one-year-old and two other children, ages five and six, were among the dead, emergency officials said.
Also among the dead were four Arabs, and the wounded included several members of the local pro soccer team, Maccabi Haifa, who meet at the restaurant every Saturday.
Gideon Zilberstein, a 63-year-old accountant, was eating lunch with his wife, son and daughter-in-law when the bomber attacked. "Suddenly we heard a huge boom all around us. People were dead or dying next to our table," he said.
Haifa, a Mediterranean port city of about 270,000 with a reputation for tolerance, has been the target of repeated attacks by militant groups — perhaps because attackers are better able to blend in here with the Arab community of 47,000.
Israeli Vice Premier Ehud Olmert said Israel faces tough decisions and, if necessary, would act on them regardless of world opinion. "The world will have to accept our decisions," Olmert said.
Yet despite a Sept. 11 Cabinet decision to "remove" Arafat at some point, Israel might shy from carrying out the threat because of strong U.S. opposition and concerns about an international backlash.
Instead, Israel could settle for a lesser step, such as increasing Arafat's isolation by installing more tanks and troops around his West Bank headquarters, where he has been confined for nearly two years. Hours after the blast, two Israeli planes briefly circled Arafat's offices in Ramallah, and Israeli army jeeps drove past.
An Israeli Foreign Ministry official said the next two days would be crucial for the survival of a U.S.-backed peace plan, suggesting Israel might not take any immediate drastic action.
Secretary of State Colin Powell called Israeli Foreign Minister Silvan Shalom on Saturday to discuss the situation. Earlier, Shalom had reassured Powell that Israel would consult with the Washington before acting against the Palestinian leader.
Israeli Foreign Ministry spokesman Jonathan Peled said Israel expected Arafat to take swift action against the militants. The Palestinian leader "will have to come up with something very, very different or serious this time to get off the hook," Peled said, adding that "the next 24 to 48 hours are crucial for the future of the ... peace process."
This would suggest Israel was not planning immediate steps against the Palestinian leader.
Arafat condemned the attack and said it endangered Palestinian interests. Incoming Palestinian Prime Minister Ahmed Qureia called the Haifa mayor to express his condolences.
He also signaled business as usual Saturday, sticking to his schedule despite the growing possibility that he could be expelled by Israel in response to the attack.
However, Arafat's advisers said they were concerned for his safety. The chief Palestinian negotiator, Saeb Erekat, said he was "worried about an Israeli action against President Arafat or against the Palestinian people that may just add to the complexities."
He told CBS News Correspondent David Hawkins, "We totally reject the Israeli government accusation tha the Palestinian Authority is (ultimately) responsible (for the bombing)."
Erekat appealed to the United States to reduce tensions on both sides to prevent Arafat's expulsion. "We need a process of de-escalation, not a policy of escalation," he said.
An aide to Arafat, who spoke on condition of anonymity, said the Palestinian leader was quite worried, and that members of his staff were placing calls to international diplomats, urging them to try to shield him from Israeli retaliation.
But in the meantime Arafat met, as planned, with the PLO Executive Committee at his partially demolished headquarters in the West Bank town of Ramallah.
Sharon holds Arafat responsible for the suicide attacks, even those carried out by Islamic militant groups opposed to the Palestinian leader's rule.
The United States is looking to the new Palestinian prime minster to crack down on militants; the attack came on the eve of the expected announcement of a new cabinet by Qureia, who was an architect of the 1993 Oslo peace agreements.
However, Hawkins says, "Israelis have all but given up hope that any Palestinian leader will crack down on terrorism." Hawkins adds that the U.S.-backed so-called Mideast peace roadmap may have hit a dead end.
The Islamic Jihad group said it organized the bombing, identifying the assailant as Hanadi Jaradat, a 27-year-old law school graduate from the West Bank town of Jenin. Her brother and a cousin, an Islamic Jihad member, were killed in an Israeli military raid in June.
British Prime Minister Tony Blair also condemned the attack — the first suicide bombing since twin attacks killed 15 people on Sept. 9, near an army base outside Tel Aviv and at a Jerusalem coffee shop.
Those attacks prompted the Israeli security Cabinet to vote to "remove" Arafat, a threat interpreted as either expelling or killing the Palestinian leader.
Sharon had hinted Israel might act against Arafat in response to an attack with many casualties. The United States opposes expelling Arafat, and Israel's security chiefs are divided on the issue. Sharon and Defense Minister Shaul Mofaz, who has spoken in favor of expulsion, have the final say and need no Cabinet approval.
Israeli Health Minister Dan Naveh said Israel must not hesitate. "This awful attack today is definitely an opportunity, the correct opportunity, to implement the Cabinet decision to get rid of Arafat," he said. "It is clear to all of us that he is the biggest obstacle to reaching better days."
There were conflicting reports about how the attack began, with some saying the bomber shot the security guard at the entrance before rushing into the restaurant.
If true, that would represent a new tactic. In the past, security guards stopped several bombers outside restaurants, cafes and shopping malls. Police Commissioner Shlomo Aharonishki said it was not clear whether shots were fired.
Saturday's bombing brought to 103 the number of suicide bombings in the past three years of Israeli-Palestinian fighting. At least 431 people have been killed in these attacks.
The attack came despite a blanket closure Israel had imposed Friday on the West Bank and Gaza Strip ahead of Yom Kippur, which begins at sundown Sunday and ends at sundown Monday. Such closures are generally imposed during Jewish holidays because of increased concerns about attacks.
Also Saturday, a Palestinian militant suspected in a deadly attack on an Israeli communal farm was killed in an exchange of fire with Israeli commandos in the West Bank town of Tulkarem, the army said. A 9-year-old Palestinian boy was also killed, hospital doctors said.
Israel charges that Sirhan Sirhan, 20, slipped into Kibbutz Metzer near the West Bank and shot dead five people, including a mother and her two small children, last November.
Sirhan, from the Al Aqsa Martyrs' Brigades — a militia loosely affiliated to Arafat's Fatah faction — escaped after the attack and despite intensive efforts by Israeli forces managed to avoid capture for nearly a year. Sirhan is not related to the assassin of the same name who shot and killed Robert Kennedy in 1968.
Saturday's bombing in Haifa came after the violent Hamas group declared that a security barrier Israel is building around the West Bank would not stop suicide bombers from reaching Israeli cities. The militant group also said it would continue to send Palestinians to blow themselves up inside Israel.
"This wall will not protect the Zionist entity and will not stop the attacks of resistance and, God willing, the day will come when this wall will collapse as the Berlin wall collapsed," said a statement, signed by Hamas, posted on a pro-Hamas Web site late Friday night.
Earlier this week, the Israeli Cabinet approved a new phase of the barrier project that will add fences deep inside the West Bank to shield four large Jewish settlements. Palestinians and the United States have opposed the path of the barrier, saying it would pre-empt peace agreements and unilaterally define the border of a Palestinian state.
Israeli officials have said wide gaps would be left — for now — between the new fences and the main barrier being built closer to Israel's frontier with the West Bank. Connecting the fences would slice the West Bank in half.
About one-fourth of the barrier project has already been built in the northern West Bank. In places, it runs close to Israel; elsewhere it dips farther into the West Bank, isolating several Palestinian villages and cutting some residents off from their land.
Israel says the barrier is essential to try to stop Palestinian suicide bombers and other attackers from reaching Israel, where they've killed hundreds during fighting that's lasted three years. Israeli officials point to the success of a fence that's been in place for years along Israel's edge with the Gaza Strip. No suicide bombers have succeeded to cross it.
In an interview published Saturday in the Washington Post, U.S. Secretary of State Colin Powell said Israel's effort to dampen criticism by leaving gaps in the new phase of the fence was not satisfactory.
Powell indicated that the route should stick to the "green line," the frontier between Israel and the West Bank before the 1967 Mideast War.
"The more you intrude in Palestinian areas and the more it looks like it could be contiguous intrusion around large sections of Palestinian land that would prejudge subsequent negotiations as to what a Palestinian state may look like, that's a problem," Powell said.
Powell added that U.S. officials were having "intense discussions" about how to respond to the new construction plans. "We have not yet come to a conclusion about what to do and what our action should be," Powell said.
One option under consideration is deducting the construction costs of the barrier from $9 billion in U.S. loan guarantees to Israel.