Reports from Washington, D.C. indicate that President Bush is having a proposal prepared, which would call for a “provisional” Palestinian state.

One senior Israeli official told the Jerusalem Post that unless there is “true reform” and a complete end to Palestinian violence, a Palestinian state would only mean more terrorism for Israel.

The Jerusalem Post has reported that the Islamic militant group, Hamas has claimed responsibility for the attack, naming the bomber as Mohammed al-Ghoul, a 22-year-old graduate student, from the al-Faraa refugee camp near the West Bank town of Nablus.

Hamas and Islamic Jihad are Islamic Fundamentalist groups that Israel had once encouraged as opposition to Palestinian Authority Chairman Yassir Arafat.

"The Palestinian Authority condemns this attack," Palestinian Information Minister Abed Rabbo told Agence France Press (AFP).

"The only beneficiary of this operation is Sharon and the occupation. Israel will use this operation to escalate its aggression against the Palestinian Authority."