The attack came amid the start of negotiations which follow Bush's first presidential visit to Israel and the occupied West Bank, where he set the goal of signing a peace treaty in 2008 and encouraged both sides to begin talking in earnest.
Tzipi Livni, the Israeli foreign minister, and Ahmed Qureia, the chief Palestinian negotiator met in Jerusalem on Monday.
An Israeli army spokesman said the latest strike was carried out by Israel's security service, Shin Beth, on a car carrying two men.
One of the other dead men was identified as Nidal al-Amoudi of al-Aqsa Martyrs Brigades, an offshoot of the Fatah faction, headed by Mahmoud Abbas, the Palestinian president.
Israeli security sources described the attack as a "targeted killing" designed to assassinate a person regarded as an enemy.
Agencies reported quoting Israeli sources that another of the dead men was Maher al-Mabhouh, a senior member of the Islamic Army group, which was involved in the abduction of Gilad Shalit, an Israeli soldier, in Gaza in June 2006.
The same group was responsible for the kidnapping last year of Alan Johnston, a BBC journalist.
|Scepticism remains as to how effective|
the talks will be [AFP]
Shalit is still being held. Johnston was released by his captors after being held for several months.
Yuval Diskin, Shin Bet's security chief, said in Jerusalem on Sunday said that Israeli security forces had killed 810 Palestinians in the Gaza Strip in 2006 and 2007.
He said that some 200 of those killed were not clearly linked to military organisations.
Haaretz, the Israeli daily, however, calculated that 360 were civilians who were not affiliated with any armed organisations.
B'Tselem, an Israeli human rights organisation, said that of those killed, 152 were minors, including 48 under the age of 14.