Israeli troops and tanks swept into a Gaza Strip refugee camp yesterday, killing eight Palestinians just hours after Israel lost its first two soldiers in a month of relative calm that has spurred peace efforts.

The deadliest raid in Gaza since October and the militant ambush that killed the Israeli officers underlined obstacles to talks after an Egyptian peace envoy was accosted by Palestinian radicals who branded him a traitor for talking to Israel.

Egypt's Foreign Minister Ahmed Maher, who won a cautious Israeli offer of support for a Palestinian truce Cairo is trying to broker, played down the incident at Jerusalem's al-Aqsa mosque and said the peace push would go on.

Palestinians said about 20 Israeli tanks rumbled into a refugee camp in Rafah overnight, drawing fire from militants. More tanks, firing machineguns, moved in during the day.

Israeli soldiers killed a 50-year-old man and two gunmen in the camp, medics said, adding another Palestinian was shot in the stomach and died in hospital.

One militant was brought dead to the hospital still clutching a bomb, witnesses said. Another died of shrapnel wounds. A Palestinian policeman was shot near the border post and an onlooker was killed as he watched tanks at his window.

Palestinian medics said at least 40 people were wounded. The army said Tuesday's raid was not in response to the ambush in central Gaza late on Monday in which two officers died - the first Israelis killed in a month. At least 25 Palestinians died in violence over the same period.

An army spokesman said the Rafah raid was "part of a continuous fight" to destroy tunnels to smuggle arms from Egypt. The army said one tunnel was found in a house. A similar operation in October took a week and left 15 Palestinians dead.

"Blood for blood and killing for killing," chanted thousands of Palestinians at funerals for the dead in yesterday's raid.

The al-Aqsa Martyrs Brigades, which lost two dead in the raid and was one of two militant groups behind Monday's ambush, vowed to strike back inside Israel. The group is linked to Palestinian President Yasser Arafat's Fatah faction.

The Jewish state has demanded a Palestinian crackdown on militant groups as a commitment to the "road map" peace plan and warned of unilateral steps if it failed that would cost the Palestinians some of the land they want for a state.

Israel says the recent spell of relative calm is an illusion and that it has caught more than 20 would-be suicide bombers trying to make their way to its cities.

Palestinians say Israel must meet its own pledges by removing Jewish outposts and freezing settlement-building on occupied land, as well as halting work on a barrier through the West Bank that Israel says it needs to keep out attackers.

Egypt has been trying to bring Israelis and Palestinians together for talks and also broker a ceasefire by militant factions that could give the peace plan fresh impetus.

Mr Sharon signalled to Mr Maher that Israel would welcome any militant truce, but factions dismissed that as empty words.

Mr Maher's landmark visit, the first since the start of the Palestinian uprising in 2000 by such a senior Egyptian official, was marred by a crowd which jeered, jostled and threw shoes at him when went to pray after meeting Mr Sharon.