Israeli occupation forces, backed by several military vehicles and helicopters, raided Saida and Alar villages, imposing a curfew on its citizens, Aljazeera's correspondent in the Palestinian territories, Muain Shadid, reported on Monday.
The fighter, identified by village residents as Shafiq Awni Abd al-Ghani, 37, was killed in the Ras Hilala area, northeast of Saida, near the West Bank city of Tulkarim, one of three cities handed over to Palestinian Authority security control under a truce declared in February.
Aljazeera's Shadid said Abd al-Ghani was the leader of Islamic Jihad's military wing al-Quds Brigades in the village.
Later on Monday, Shadid reported that al-Quds Brigades, the military arm of Islamic Jihad, fired rockets at the Israeli town of Sderot, north of Gaza, in retaliation against the killing of an Abd al-Ghani.
Israeli military sources said Abd al-Ghani had fired at the advancing soldiers.
Aljazeera's correspondent said the fighter had killed an Israeli soldier before being killed himself. Dozens of citizens threw stones and empty bottles at the soldiers afterwards.
Tukarim was a scene of frequent
gun battles during the intifada
Palestinian residents of the village said occupation troops entered before dawn and imposed a curfew during their search for suspects before withdrawing to the surrounding hills.
The curfew, also imposed on Alar village, prevented students from going to school and shops from opening, Shadid said.
Saida is one of several villages which Palestinian authorities demanded be included in the March handover of Tulkarim to Palestinian security control, but Israel refused saying the villages were full of fighters, including those behind a February suicide bombing in Tel Aviv which killed five Israelis.
No immediate comment was available from the Palestinians.
Previous incidents involving Israeli forces have drawn Palestinian charges that Israel was sabotaging efforts to implement an internationally backed road map peace plan.
Israel says it reserves the right to go after fighters planning imminent attacks.
A PA call for Palestinian factions
to disarm has been rejected
On Sunday, the army said it captured an Islamic Jihad member near Tulkarim who had planned to carry out a bombing.
In Gaza on Monday, Palestinian bulldozers demolished the homes of three senior Palestinian officers as part of what the government said was a new anti-corruption campaign.
The officers - a major, a lieutenant-colonel and a colonel - had built the seaside homes north of Gaza City after illegally seizing public land. The homes had been under construction for four months, but were not yet completed.
The demolitions come a day after Palestinian Interior Minister Nasir Yusuf promised to fight government corruption and said he would start with the security services.
In more than four years of Israeli-Palestinian fighting, lawlessness has become rampant in the Palestinian areas, and some of the senior officers in the security services have blatantly violated the law, including by taking public land for personal use.
In a separate development, Hamas on Monday rejected the Palestinian interior minister's statement underscoring the need for withdrawing all weapons from the Palestinian street.
A movement spokesman, Sami Abu Zuhri, said such demands were not in line with the understanding reached between Palestinian factions and the Palestinian Authority.