The Israeli army said he was caught wearing an explosive belt at an army roadblock in the northern West Bank.
The boy, identified as Husam Abdu from Nablus, was shown on TV screens around the world, with an explosive belt strapped to his waist.
The Israeli army said the boy told interrogators that his dispatchers promised that he would have sex with 72 virgins in heaven soon after his death.
"We know for sure this is a fabricated story from A to Z. Would you believe that a 13 or 14-year old would agree to blow up himself in return for a hundred shekels which he would receive after his death?
"It seems to me that the Israelis are bad liars as well," said Yaqub Shahin, a director-general of the Palestinian Authority ministry of information.
Painting a 'terrorist' picture
In an interview with Aljazeera.net, Shahin accused Israel of seeking to justify slaughtering Palestinian children by spreading the false impression that they are used as human bombers.
"Their [Israel’s] goal is to besmirch Palestinian childhood so that when they slaughter the children, the world won’t feel sorry for them," he said.
Arab Knesset member Muhammad Baraka has also voiced "serious doubts" about the veracity of the Israeli narrative.
"I have very serious doubts about the whole story. I can't give the Israeli army the benefit of the doubt."
However, Baraka urged all parties to "keep children away from this sinister and bloody conflict.
Israelis have killed 263 children
under 14 in the Intifada
"Using children as bombs is infinitely diabolical. It is totally inconsistent with all religious, moral and human values."
The armed wing of Fatah, the Aqsa Martyrs’ Brigades, has denied any involvement in the incident, accusing Israel of "concocting the whole story for the purpose of justifying the killing of more Palestinian children".
The Israeli newspaper Yedeot Ahranot reported on Thursday that Abdu told Shin Beth interrogators that an anonymous person had promised him 100 shekels if he blew himself up in the midst of Israeli soldiers.
Samir Khiwairah, a Nablus journalist who personally knows the boy’s family, told Aljazeera.net that the boy’s mental capacity to distinguish things is very low.
"I don't completely rule out the possibility that some evil person gave him the explosive belt and told him he would become a hero ... but this is a very tiny possibility."
Khiwairah said the Israeli army had a history of "fabricating and concocting stories" for the purpose of vilifying the Palestinians and winning public relations points.
A few weeks ago, another boy from Nablus, Muhammad Kuraan, made headlines when the Israeli army presented him to the media as a child who had been dispatched to blow himself up at an Israeli roadblock.
However, when the boy returned home, he reportedly told his family and relatives "Jews told me to do this or else they would kill me."
Palestinian children climb over
the rubble of a demolished house
Aljazeera.net asked the Israeli army spokesman in Tel Aviv to explain why Abdu would accept 100 shekels to get blown up and what good the money could possibly do?
The army was also asked to explain why it had TV cameras ready at the roadblock more than two hours before the event.
Despite two hours of waiting, the army failed to provide an answer.
The controversy of using children in the Israeli-Palestinian strife underscores the brazen ugliness of the conflict.
According to human rights groups operating in the occupied territories, the Israeli army has killed hundreds of Palestinian children since the outbreak of the Palestinian Intifada more than three and a half years ago.
According to a spokeswoman for the East Jerusalem-based Palestinian Human Rights Monitoring Group (HRMG), the Israeli army and paramilitary Jewish settlers have killed 263 Palestinian children from age 0-14 and 236 minors from the age of 15-18 during the ongoing Intifada.
The total number of Palestinians killed by Israel since the outbreak of the Intifada is estimated at 2670.
The figures for the injured and maimed are believed to be in the thousands.
The number of Israelis killed by Palestinians during the same period is around 838, including soldiers, settlers and civilians.
Israel claims its army does not target Palestinian civilians deliberately but admits, rather grudgingly, that the killing is carried out knowingly.
However, human rights groups argue forcefully that, in the final analysis, killing knowingly is killing deliberately.