Israeli military sources said orders for mobilising reserve soldiers were also being drawn up because of an increase in "terror" threats.
Meanwhile, the military extended a two-week lockdown on Palestinians' travel within the West Bank and Gaza, in what it said was an attempt to prevent further attacks.
The closure was imposed before the Jewish New Year two weeks ago. Normally such closures are lifted after Jewish holidays.
Defence Minister Shaul Mofaz ordered the lockdown against the recommendations of top security officials who noted the level of warnings was not unusual.
The closure meant that West Bank residents were unable to leave their communities, and that checkpoints divided the Gaza Strip into four parts, cutting off major roads.
Stringent travel bans have been in effect for the past three years of fighting, but at times of relative calm Palestinians are able to move within the West Bank and Gaza, with some restrictions.
But under a blanket closure, life comes to a standstill.
The closure is to remain in effect at least until 22 October, and the government will then decide whether to call up reservists.
In another development, Palestinian Prime Minsiter, Ahmad Quraya, is planning to seek parliament's approval on a new cabinet on Thursday.
Over the weekend, Yasir Arafat installed an eight-member emergency Cabinet, headed by Quraya whom he tapped for the job last month.
Nasir Yusuf, who is to oversee security as the new interior minister, refused to participate in the swearing-in of the cabinet on Tuesday, saying he did not want to take office until the government had the parliament's backing.
Ahmad Quraya replaced Mahmud
Abbas as Palestinian PM
Last month, Yusuf had a bitter argument with Arafat over the extent of his authority, but the dispute appears to have been settled.
Security policy will be set by a 13-member National Security Council headed by Arafat and Yusuf will have command of all eight security branches.
In the past, four of the branches were under Arafat's direct control and four under those of the interior minister.
It remains unclear how much control Arafat will retain under the new arrangement.
The United States and Israel, who have accused Arafat of encouraging "terrorism", have demanded that he should not have any say over security.
Meanwhile, the Israeli army has arrested the wife of an Islamic Jihad leader who was linked to a weekend resistance attack.
Camilia al-Ubaid is the wife of Amjad al-Ubaid, a senior of al-Quds Brigade, the armed wing of Islamic Jihad.
She was arrested in the family house in the village of Zabuba, close to the occupied West Bank city of Jenin, said a source close to the family.
Her husband, 36, is wanted in connection with the resistance
attack at a restaurant in the northern Israeli city of Haifa that left 19 people dead.