Seven bystanders, most of them children, were wounded in the attack.

An Israeli army spokeswoman confirmed that the military carried out the attack on a wanted member of the Islamic Jihad.

Witnesses and Palestinian security sources said the two activists, whose names were not immediately known, were travelling in the car when it exploded into a ball of flames on Monday.

Witnesses said the eight-year-old boy was killed while standing close to the car.

Two others, boys aged 14 and 15, also died, a hospital official said.

Sources said at least one rocket was fired from an Israeli occupation army aircraft into the car as it drove down Salah al-Din Street in the Gaza City centre.

'Massacre'
  

Seven others, mostly children,
were wounded in the attack

An Israeli military source said one of the activists killed was involved in rocket attacks against Israel.

Hamas, which is forming a government after winning Palestinian parliamentary elections in January, called the air strike a "massacre".

Sami Abu Zuhri, a Hamas spokesman, said that "if the international community remains quiet the situation will explode."

Mahmoud Abbas, the Palestinian president, said it was a dangerous escalation against the Palestinian people.

Monday's deaths bring to 4975 the number of people killed since the outbreak of the second Palestinian uprising (intifada) in 2000.

More than three-quarters of the victims have been Palestinian.
     
Ehud Olmert, the acting Israeli prime minister, on Thursday lifted restrictions on the Israeli army in its operations against the Palestinian resistance movements.