The attack on Sunday also wounded two other Israeli soldiers. One Palestinian fighter was also killed and another wounded.


The Israeli army said one of the wounded soldiers was in serious condition and the other was stable.


The raid targeted soldiers and contractors who were doing building work on an Israeli occupation force base.


Islamic Jihad said the attack was a joint operation between its members and other groups affiliated with the Fatah movement.


The attack came as US Secretary of State Condoleezza Rice met Israeli officials to help coordinate Israel's planned disengagement from the Gaza Strip.


The level of Israeli-Palestinian violence has dropped considerably since a truce was agreed to in February, though 23 Palestinians have been killed - half of them children.