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Frightened and enraged by a horrific mass killing at a bus stop outside Tel Aviv, Israel tightened travel to and from the West Bank and Gaza Strip on Wednesday and considered new measures to restrict movement of Palestinians inside Israel.

The attack at the suburban Azur bus stop, in which a Palestinian bus driver deliberately plowed into a rush hour crowd of young soldiers and civilian commuters Wednesday morning, killed eight and injured at least 20.

The incident was the bloodiest committed against Israelis since the Palestinian territories erupted into a violent uprising more than four months ago and followed by a day Israel's assassination of a Palestinian security officer.

Reaction mixed anger and anxiety. Some Israelis called for shutting off the Palestinian territories. Others feared that the incident might provoke even more violent retaliation.

The bus attack accelerated efforts by Israel's two rival political camps, led by Prime Minister-elect Ariel Sharon and his defeated predecessor, Ehud Barak, to negotiate the terms of a joint government. Negotiator Haim Ramon of Barak's Labor Party said agreement was close.

"We are almost at the end of the road. There are disputes, but not of the kind that would prevent the formation of a national unity government," Ramon said.

Sharon and Barak have already agreed on the outlines of a peace program, aiming at another interim accord with the Palestinians, instead of a full peace treaty.

Barak, meanwhile, was expected to announce shortly whether he would accept Sharon's offer to serve as defense minister. Barak had said after his crushing defeat Feb. 6 that he would leave politics for a while.

In new violence today, a Palestinian trying to infiltrate the Jewish settlement of Kfar Darom was killed in a firefight with Israeli soldiers, the army said. The man, identified by Palestinians as Nasser Hassanat, 23, was killed near the settlement's greenhouses.

Hassanat, a resident of the Deir El Balah refugee camp, was not in uniform but carried documents identifying him as a member of the Palestinian Preventive Security Service.

Israel's government, meanwhile, appeared at a loss on how to deal with the upsurge of violence. The closure of the Palestinian areas, reimposed after the bus attack, prevents about 150,000 Palestinian workers from reaching their jobs in Israel.

Deputy Defense Minister Ephraim Sneh warned that a protracted blockade would be counterproductive, deepening Palestinian resentment. However, even a controlled easing of the restrictions cannot prevent attacks, others said.

Khalil Abu Olbeh, the assailant in Wednesday's bus attack, was among the 16,000 Palestinians allowed back into Israel two weeks ago, as part of an easing of the closure. Israel army radio said Abu Olbeh told interrogators he had planned the attack for some time.

Abu Olbeh of Gaza City is an unlikely assailant. He is a father of five, who has five years of experience driving buses for Egged, the Israeli intercity bus cooperative.

Abu Olbeh received his latest clearance only two weeks ago from Israeli security forces to perform his job of transporting Palestinian laborers from Gaza to work in Israel.

Like hundreds of thousands of Palestinians who have economic ties to Israel, the bus driver was suffering financially since the Palestinian uprising began at the end of September.

Partly for security, partly to pressure the Palestinian Authority and partly as what Arabs say is a collective punishment, Israel has severely restricted the rights of Palestinian laborers to cross into Israel. As a result, the Egged buses that transport documented Palestinian workers were running only rarely.

Palestinian leader Yasser Arafat, returning today to Gaza City from abroad, renewed allegations that Israel was largely responsible for the upsurge of violence.

Asked about President Bush's appeal that Israelis and Palestinians try to calm the situation, Arafat said: "I thank him, but he must know that we are not the ones who used depleted uranium or poison gas or helicopters or shells or tanks."

Arafat has repeatedly alleged that Israeli soldiers are using depleted uranium ammunition and poison gas against Palestinians, but he has offered no evidence. Israel has denied the charge.

The Palestinian leader warned that "this escalation does not only endanger peace, but also stability in the area."

Israel has said that while the Palestinian Authority was not directly responsible for the bus attack, it has incited violence against Israel and encouraged killings.

The attack prompted widespread anxiety in Israel about the future relations with the Palestinians. With peace talks unlikely to resume in the near future, some warned the two sides were sliding into a full-fledged confrontation.

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