JERUSALEM -- Israeli soldiers shot dead four Palestinians in the West Bank village of Beit Liqia near Ramallah on Wednesday, Israeli security sources said.


They said the troops opened fire after gunmen shot at the soldiers and wounded one. They gave no further details.


The incident came after Israeli troops and Palestinian police exchanged fire in the Gaza Strip in the same area where Israeli forces killed three Palestinian policemen Monday night, witnesses said.


They said Israeli troops wounded two Palestinians, at least one of them a civilian, who was hurt in the hand. It was the latest in a series of gun battles following the killing of the policemen, residents said.


The Monday encounter, near the Erez crossing to Israel, was the bloodiest between forces since Israeli troops handed over most of the Gaza Strip to Palestinian rule eight months ago.


The army closed the Erez crossing after the shooting incident Wednesday, witnesses said.


As in previous cases, it was unclear who started the shooting -- or if a third source was involved. Israeli commanders speculate anti-Israeli gunmen provoked Monday's incident, firing from a nearby orchard before fleeing.


In Damascus on Wednesday, the radical Popular Front for the Liberation of Palestine, which opposes the 1993 Palestinian-Israeli peace deal, urged the PLO-led police to rebel and turn their guns against Israel.


The group said the killings of the policemen Monday night "proved that the deal was fragile and could not protect even the Palestinian police."


The violence and a dispute over expanding Jewish settlement in the West Bank cast a pall over Israeli-PLO crisis talks, which ended in disarray in Cairo on Tuesday.


Bulldozers began clearing a new Jewish settlement site in the West Bank on Wednesday, as part of a government compromise to save the threatened talks, witnesses said.


The witnesses said workers broke ground for housing units on a hillside tract which is near to another hill where Israeli troops and protesters clashed last week over plans to build on what Arab villagers said was their land.


On Monday Israel's government, under pressure from its Palestinian peace partners, halted work at the scene of the clashes, near the Arab village of al-Khader, and authorized work on another location, closer to the existing Jewish settlement of Efrat.


But the compromise has done little to defuse the dispute over settlement, one of the thorniest points of contention still to be negotiated in the peace deal.


"As one who has taken part in very many meetings like this, I can say that this was a perhaps especially difficult meeting," Environment Minister Yossi Sarid, a senior negotiator and an architect of self-rule in Gaza and Jericho, told Israel Radio


Gazans said houses were damaged and four Palestinian families had to flee a two-hour shootout in the strip's Khan Younis refugee camp late Tuesday.


Also on Tuesday night, Palestinian police said they arrested 10 Israeli secret police members who had strayed into the self-rule area in Gaza.


Israel said they were uniformed soldiers pursuing what they believed to be militants who abducted an Israeli soldier. Israel was rife with rumors Tuesday about the possible kidnapping of an Israeli soldier.