Gaza — An Israeli warplane blew up the house of a leading Hamas rebel in the Gaza Strip early Tuesday, killing at least 11 people, including his wife and several children, Palestinian officials said.

The air strike came just as Palestinians and Israelis were trading ideas to relieve tensions in the West Bank, but the bloody results of the Israeli attack were likely to derail the efforts as Hamas threatened revenge.

The security officials said the house belonged to Sheik Salah Shehada, founder of the military wing of Hamas, known as Izzadine el-Qassam, in Gaza and the West Bank.

Hamas spokesman Ismail Haniyeh said Sheik Shehada's wife and three of their children were killed. He did not say whether Sheik Shehada himself was among the casualties. Hospital officials said more than 100 people were wounded.

A Hamas announcement said Sheik Shehada was alive. "We will revenge for the blood of the martyrs," the statement said.

In a statement, the Israeli military confirmed that Sheik Shehada was the target and said he was hit. The military said Sheik Shehada was behind "hundreds of terror attacks in the last two years against Israeli soldiers and civilians."

The Hamas military wing has claimed responsibility for dozens of attacks against Israelis during nearly two years of fighting, including many suicide bomb attacks. Also, Hamas has been behind almost daily mortar attacks on Jewish settlements in the Gaza Strip.

Several weeks ago, Israeli Prime Minister Ariel Sharon said Israel would deal with the rebel groups in Gaza. At one point a ground invasion was called off after details were leaked to the media. So far Israel's ground operations in Gaza have been limited to areas near the settlements, in contrast to the large-scale invasions of the West Bank.

Hamas threatened to hit back for the air strike. Mr. Haniyeh said, "Not only will Hamas take revenge for the martyrs, all the Palestinian people will unify to revenge for the blood of the martyrs," talking to reporters at Gaza's Shifa hospital, where the dead and wounded were taken.

Before the attack, top Israeli and Palestinian officials were exchanging ideas about easing Israeli restrictions in the West Bank, scaling back an Israeli chokehold that has led to warnings of starvation and malnutrition there.

Israeli Foreign Minister Shimon Peres said that the army was prepared to withdraw from two West Bank towns, Bethlehem and Hebron, as long as they remained quiet and if the Palestinians assumed control of security.

However, more hawkish elements of Israel's government expressed deep skepticism about the possibility of reaching any deal that would hold, and suggested that Israel would remain in the Palestinian towns for considerable time — even until Palestinian leader Yasser Arafat was no longer in power — and suffice for now with efforts to aid the population there.

The air strike in Gaza, however, changed the focus and threatened to rekindle the conflict.

Also Monday, Israeli police reopened the university offices of the leading Palestinian official in Jerusalem, Sari Nusseibeh. Police closed his office two weeks ago, alleging that Mr. Nusseibeh, the president of Al Quds University, had violated peace accords by engaging in Palestinian political activity in Jerusalem.

Mr. Nusseibeh, who is also the chief representative of the Palestine Liberation Organization in Jerusalem, said he signed a document Monday agreeing not to use the premises for political activity. However, he said he'd conduct his PLO activity elsewhere.

The Palestinians want east Jerusalem for the capital of a future state, while Israel claims sovereignty over the entire city.

Monday's statement by Mr. Peres followed a three-hour meeting Saturday in a Tel Aviv hotel between the foreign minister and fellow cabinet member Dan Naveh and a Palestinian delegation headed by cabinet minister Saeb Erekat.

The meeting was also attended by the new Palestinian interior minister, Abdel Razak Yehiyeh, who is responsible for security in the Palestinian territories.

The Israeli daily Haaretz reported Monday that Mr. Yehiyeh outlined a proposal to resume security co-operation with Israel after Israeli troops withdraw. Security co-operation, in which the sides share information and act jointly where possible to prevent attacks, ground to a halt after fighting erupted in September 2000.

Palestinians would undertake to confiscate illegal weapons and arrest rebels, Haaretz reported. In return, the newspaper said, Israel would free prisoners arrested in the fighting, end its strikes on Palestinian targets and end its "targeted killings" of rebels — which the Palestinians call assassinations.

The proposal was similar to a deal worked out last summer by CIA director George Tenet that was never implemented as the violence escalated.

An Israeli government official, speaking on condition of anonymity, said the proposal was being discussed as part of a broader discussion on reforming the Palestinian security and financial apparatus.

"Certainly we are looking very seriously into the venue of co-ordinating the security," the official said.

But Ranaan Gissin, spokesman for Mr. Sharon, said Israel wouldn't make any concessions before the Palestinians moved to end attacks.

"There will be no concession on security until we see them take steps," he said, adding that as a first move the Palestinians should assume security control in the Gaza Strip to show that they were willing to crack down on rebels.

Palestinian officials have demanded Israel withdraw from the towns, saying they can't prevent attacks against Israelis as long as the army is in place, enforcing curfews and hunting down rebels.

In violence Monday, two Palestinian rebels were shot and killed by Israeli soldiers when they tried to attack a Jewish settlement in the southern Gaza Strip, the army said. Two soldiers were lightly injured in a clash, the army said. The Islamic Jihad claimed responsibility for the attack in announcements at Gaza mosques and in a fax sent to The Associated Press in Beirut.