GAZA CITY, Gaza Strip (AP) – Israeli tanks moved into central Gaza early today, witnesses said, killing seven people and destroying two houses. Troops also arrested two members of the Islamic Hamas militant group. The incursion into the Nusseirat and Bureij refugee camps followed pledges by Israeli officials to crack down on militants from the violent Hamas group. The Israeli military would say only that an operation was in progress.

Israeli troops backed by tanks and attack helicopters raided a Gaza Strip town early yesterday, killing one Palestinian militant in fierce fighting and demolishing abandoned buildings and the exterior wall of a hospital, Palestinian officials and the army said.

Entering the town of Khan Younis in southern Gaza before dawn, Israeli forces met fierce resistance. Firefights erupted with gunmen who used a school, a hospital and a mosque as cover when firing on troops, the army said.

Gunamn Mahmoud Abed Hadi, 27, was killed in the fighting, hospital official officials said. At least 35 Palestinians and two soldiers were wounded.

The latest military operation came hours after Palestinian officials agreed to convene the Palestinian Legislative Council next week and begin the process of appointing a prime minister, one of the reforms Israel and the United States demand as a precursor to the renewal of peace talks.

The army has increased its operations in the Gaza Strip since Feb. 15 when the Palestinian Islamic group Hamas claimed responsibility for planting a bomb on the path of an Israeli tank, which killed all four soldiers inside. It has also been operating in Khan Younis recently after a Palestinian gunman killed an Israeli soldier on Feb. 23.

Col. Pinchas Zoaretz, the commander of the operation, said the raid was to retaliate for the killing of the soldier and to demolish buildings and structures militants use to fire mortar bombs and Qassam missiles at Israeli towns and settlements.

“We also want to continue putting pressure on the terrorist organizations…to create a situation in which we are on the offensive and they are on the defensive,” Zoaretz said.

Troops demolished an eight-story building that gunmen had hidden in 14 times in the past four months while firing on soldiers and several other abandoned structures also used for cover by militants, the army said.

Palestinians planted bombs and fired anti-tank missiles at the troops overnight, area residents said. The operation has left 85 people homeless, officials said, adding that at least five Palestinians have been arrested so far. Soldiers demolished the outer wall of Mubarak Hospital and raided Nasser Hospital, officials said.

“During tonight’s aggression the occupation army didn’t show any respect to our medical teams and they fired on ambulances and attacked the hospital too,” Dr. Haidar Kidera, the director of Nasser Hospital said.

Zoaretz denied his troops entered hospital grounds, saying soldiers were forced to enter the courtyard of a school – which is not far from one of the hospitals – after militants detonated a bomb at an armored vehicle, sending it flying into school grounds. Troops entered the schoolyard to rescue the vehicle, he said.

“They are trying to create spin in the media that we attacked a hospital but this never happened,” he said.

Meanwhile, the Palestinian Legislative Council is scheduled to meet between March 8 and 12 to amend Palestinian Authority law to create the position of prime minister. It is also expected to determine the responsibilities of the role.

“President Arafat has accepted the idea of nominating a prime minister,” said Nabil Abu Rdeneh, an adviser to the Palestinian leader.

Israel and the Palestinians are arranging safe passage for the members who due to travel restrictions have not met face-to-face as a council in more than a year. Some members have had to meet via teleconference.

Israel has said it will allow the meeting but will prohibit members suspected in attacks against Israelis from attending.

Even if the meeting occurs, deliberations are expected to take some time. Arafat- who is under increasing international pressure to name a prime minister – may also postpone the appointment, said a Palestinian Authority official, who asked not to be identified.

Salam Fayad, the Palestinian’s top finance leader, released on Friday a lengthy report on Palestinian finances and detailed $600 million in liquid assets in 79 ventures.

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