The announcement by the Al-Aqsa Martyrs Brigades to renew attacks came hours after Palestinian security personnel arrested 20 resistance fighters from inside the headquarters of Yassir Arafat in the West Bank town of Ramallah.
"We have ordered the resumption everywhere of our attacks and in particular martyrdom operations," the group linked to Arafat's Fatah movement said in a statement.
The group condemned the arrests, accusing those who carried them out as "collaborating" with Israel.
"This American-Zionist decision to arrest the activists was taken in Washington so that it could be applied in all Palestinian territories," the statement alleged.
"The Al-Aqsa Martyrs Brigades will strike with an iron fist all those who carry out Zionist and American plans," the statement added.
The surprise arrests by the Palestinian security forces took place in the early hours of Saturday.
At least 14 of those arrested were members of the Al-Aqsa Martyrs' Brigades.
The group is effectively under Arafat's command and had signed up to the three-month suspension of attacks against Israel along with other Palestinian resistance groups, notably Hamas and the Islamic Jihad, on 29 July.
The Brigades' announcement followed the wounding of eight late on Friday during two separate confrontations with Israeli troops in the West Bank, Palestinian hospital sources said.
They said five Palestinians were wounded in the northern West Bank village of Jaba and three near Bethlehem.
'We have ordered the resumption everywhere of our attacks and in particular suicide operations' --Al-Aqsa Martyrs Brigades
People in Jaba village told Aljazeera's correspondent that Israeli forces had surrounded many Palestinian houses, in an attempt to track ‘wanted’ members of the Al-Aqsa Martyrs' Brigades, believing they were hiding there.
“Israeli forces could not capture any activists, so they imposed a curfew on the village,” resident Abu Aqla said.
“Clashes then erupted between Israeli forces and people of the village," she added.
Islamic Jihad may resume attacks
Palestinian resistance group Islamic Jihad also threatened on Saturday to break off the three-month truce it announced in late June and resume attacks against Israel.
"We warn the Zionist enemy that its continuing aggressions are going to force us to start the countdown to ending the truce," the movement said in a statement.
It hit out at Israel over its suppression of a protest by Palestinian prisoners in the Shikma prison outside the southern city of Ashkelon on Thursday in which Palestinian sources say 10 inmates were wounded, as well as five warders.
Islamic Jihad, like its larger Islamist rival Hamas, conditioned its three-month truce on the release of all 6,000 Palestinian prisoners in Israeli jails, but the right-wing government of Ariel Sharon has so far refused to free more than a few hundred.