The measure comes as relatives prepared to bury five killed in the blast on Monday. Thirty-six people remain in hospital, with three reported to be in serious condition.
Ehud Olmert, acting prime minister, has convened key cabinet ministers and security chiefs to discuss a response to the attack, the first in Israel since the Palestinian Hamas-led government took power in March.
Defence chiefs are seeking to recommend that the northern West Bank be sealed off and that operations against Islamic Jihad be intensified, including so-called targeted killings of senior leaders, sources said.
The Israeli army has deployed reinforcements on all major highways and on the border with the occupied West Bank, where the bomber, from the Palestinian resistance group Islamic Jihad, lived.
Israeli troops arrested the father of the bomber in his home town in the northern West Bank, while about 30 more Palestinians in the area were detained.
Overnight, Israeli aircraft fired missiles at a metal workshop in Gaza City which the army said was being used to make rockets.
Hamas refused to condemn the bombing on Monday, saying it was self-defence against what it called Israeli aggression.
However, Mahmoud Abbas, the Palestinian president, said the attack was against Palestinian national interests.
Israeli and Palestinian envoys at the United Nations also traded angry remarks over responsibility for the attack, with the Israeli ambassador, Dan Gillerman, blaming a new "axis of terror" - Iran, Syria and the Hamas-run Palestinian government.
Palestinian envoy Riyad Mansour accused Israel of "grave breaches of international law".
The UN, the European Union and the US have all condemned the bombing.