A huge military build-up was reported in Ramallah on Wednesday evening with gunship helicopters hovering overhead.
Sharon held an emergency meeting of his cabinet hours earlier following the bomb attacks onboard a bus in Jersualem which killed 18 people the day before.
The Palestinian Authority condemned the Israeli moves. "Any Israeli reaction will undermine our work and cause further deterioration of the situation," Palestinian Information Minister Nabil Amr said.
Tension was up in the region. Some 15 Israeli tanks were seen moving out of an army base just north of Ramallah late on Wednesday and heading along a major road towards the West Bank city, Palestinian security sources said.
Tanks in place
Five of the tanks, accompanied by a similar number of jeeps, stationed themselves at the main entrance to the neighbouring town of El Bireh, while the remaining tanks stopped just short of Ramallah.
The attacks expected to start on Wednesday night could last several days, and undermine the US-backed “road map” peace process. Israel said it would go ahead with its attack despite Palestinian Prime Minister Mahmoud Abbas’s order to arrest those responsible for the bombing.
Israel appeared to have the sanction of the United States for the attack. President Bush called Sharon on phone and said Israel had the right to defend itself following the bombing, White House spokesman Scott McClellan said.
"Any Israeli reaction will undermine our work and cause further deterioration of the situation."
Nabil Amr, Palestinian Information Minister
Bush told Sharon he "strongly condemned the vicious attack on innocent civilians and the two leaders said that this latest attack in Jerusalem only reinforced the need to crack down on terrorists".
Bush also demanded that the Palestinian Authority crack down on resistance fighters. "There is more to do: The Palestinian Authority must act to dismantle terrorist organisations," said McClellan. "You can't just continue to let them exist, you have to dismantle them."
Asked whether Bush sought restraint from Israel in any response, McClellan replied, "We've always said that Israel has a right to defend itself. This was a vicious attack on innocent civilians yesterday.
"But it's important for all the parties to continue talking about the way forward, and the way forward is the dismantlement of terrorist organisations," McClellan said.
Bush left the task of speaking to Palestinian Prime Minister Mahmoud Abbas to US Secretary of State Colin Powell and to special envoy John Wolf, urgently sent to the region after Tuesday’s explosion, officials said.
On Tuesday night, a Palestinian resistance fighter disguised as an ultra-Orthodox Jew blew himself up on a bus in Jerusalem, leaving 18 dead.