The attack at the settlement of Netzarim, southwest of Gaza City, came as Israeli officials disclosed that a security barrier being built along the West Bank could become a unilaterally imposed border annexing the strategic Jordan River Valley to Israel, a development that could further strain the peace process.
Military officials said that around 4 a.m. the infiltrators cut through a fence, entered the settlement and opened fire. Two female soldiers and one male were killed. An Israeli female soldier was seriously wounded.
Resident Eliahu Zan, part of a settler security guard squad, said that he got a call on his walkie-talkie warning that an attacker was in the settlement and residents turned off house lights and prepared weapons.
"We heard the sound of the shooting very loudly. It pounded in our ears," he told Israel Radio.
Soldiers shot and killed one of the Palestinians, who was armed with an automatic rifle, the officials said. Troops were looking for another, but heavy fog was hampering the search, the officials said.
In a phone call to The Associated Press, the militant Islamic Jihad said one of its members carried out the shooting together with a gunman from Hamas. The caller identified the attacker killed by soldiers as Samir Fouda, 21, a Hamas militant from Gaza's Jebaliya refugee camp, and said the other attacker escaped.
Late Thursday, in another attack, three members of an Israeli settler family traveling in a car were lightly wounded in a roadside shooting in southern Gaza. The three were cut by shattered window glass and suffered other injuries when their car swerved. The army said troops shot and killed the attacker.
Also, in northern Gaza, soldiers shot and killed a Palestinian who approached the fence of another settlement, the military said.
About 7,000 Israelis live in Jewish settlements in Gaza, amid about 1 million Palestinians. The Gaza Strip is surrounded by a security fence, which has prevented most attempted infiltrations from Gaza into Israel.
However, Israel's plan to build a similar fence around the West Bank has run into stiff criticism, because it would cut deep into the West Bank, territory claimed by the Palestinians.
A senior Israeli official said the plan for a fence that would cut the Jordan River Valley off from the rest of West Bank has been approved. However, no funds have yet been allocated for its construction, the official said, speaking on condition of anonymity.
Up to now, most attention has been focused on the other side of the West Bank, where Israel has completed the first section of the barrier.
Israel says the barrier is necessary to keep suicide bombers and other Palestinian attackers out of the country. But Palestinians refer to the complex of fences, walls, electronic sensors and barbed wire as an "apartheid wall" designed to confiscate their land.
While Prime Minister Ariel Sharon has said that the barrier is meant as a security measure, not a border, Finance Minister Benjamin Netanyahu — Sharon's main rival in the ruling Likud Party
went the extra step in an interview with Channel Two TV, implying that the barrier could be a permanent frontier.
"At this moment, because we do not have an arrangement with the other side, we are making a unilateral arrangement," he said in the interview broadcast Thursday.
The United States is opposed to unilateral measures by either side that would pre-empt negotiations under the "road map" peace plan, which calls for an end to three years of violence and leads to a Palestinian state in 2005. Issues like borders and the future of Israeli settlements are to be negotiated in the final stage of the "road map" plan.
The senior official said the route of the fence along the Jordan Valley would fit Sharon's concept of permanent Israeli control over the valley.
Sharon's long-standing concept of a permanent arrangement with the Palestinians would give the Palestinians authority over populated enclaves around the West Bank, while Israel would maintain control over the entire periphery.
Palestinians demand a state in all of the West Bank and Gaza Strip with a capital in the Arab section of Jerusalem.
Nineteen small Jewish settlements dot the Jordan River Valley, a parched, hot strip of barren land punctuated by two main oases — the Palestinian towns of Jericho and Jiftliq. The kingdom of Jordan is clearly visible across the narrow river.
The official said the security fence would prevent infiltrations into the settlements from the West Bank and across the Jordan River, while protecting Israel from attacks from Jordan.
This week, the U.N. General Assembly overwhelmingly passed a resolution demanding that Israel stop construction of the barrier and tear down the sections already completed, but Israel rejected the nonbinding resolution.
Also Thursday, Palestinians and the United States criticized the latest Israeli tender for building new housing in West Bank settlements.