The revelation comes after Israel arrested a six-member cell of Islamic militants in the village Surif, north of Hebron, who allegedly killed 11 Israelis and wounded 49 over the last 18 months.
Ahmed Rahman Ismael Rahman Ranimat, 25, the leader of the cell, led Israeli troops to the grave of Sgt Sharon Edri, an Israeli soldier, shot dead last year when he got into a car driven by members of the group. The discovery of his body is causing embarrassment to the Israeli police who at one stage said they believed that Sgt Edri had disappeared for personal reasons.
The arrest of alleged members of the cell, which formed part of the military wing of Hamas, is also causing some embarrassment to the Israeli security forces.
They had believed the rash of attacks in the area was being carried out by the so-called "Halhoul Cell" of the Popular Front for the Liberation of Palestinian, a militant but secular organisation in a neighbouring town.
The break-up of the cell appears to have come partly as the result of co-operation with the Palestinian Preventive Security after pressure from the United States on Yasser Arafat, the Palestinian leader, to resume security co-operation with Israel.
Yitzhak Mordechai, the Israeli Defence Minister, said: "We are talking about a murderous cell, which killed five Israelis in the region of Gefen Tirosh, three Israelis in the Tel Aviv coffee house, two soldiers along the Hebron-Jerusalem road and also kidnapped and murdered Sharon Edri in cold blood."
The discovery of the cell somewhat deflates the theory of Benjamin Netanyahu, the Israeli Prime Minister, that Mr Arafat gave "a green light" for the Tel Aviv attack, since the Surif group appears to have attacked whenever an opportunity offered. Mousa Ranimat, one of the Ranimat clan, which is powerful in Surif, accidentally blew himself up in the Apropo coffee house in Tel Aviv three weeks ago.
The cell, which started to operate at the end of 1995, did not find it difficult to kill Israelis. Their method of operation shows the impossibility of full protection against such attacks.
All of the cell members looked like Israelis, spoke Hebrew because they had worked in Israel and, for the same reason, knew their way around.
They had a car with yellow Israeli licence plates, so they could operate easily within Israel. All were in their twenties and most had been arrested for Hamas activities.
Two of the six cell members were arrested within areas controlled by the Palestinian Authority, after the CIA put pressure on Mr Arafat. Despite the obsessive focus on security in Israel, actual security measures are frequently slack. Israeli soldiers often hitchhike to or from their bases. All the Hamas group had to do to get Sgt Sharon Edri, who was buried yesterday, into their car, was to offer him a lift. When he became suspicious they shot him.
Mr Arafat will want Israel to pay a price for the resumption of limited security co-operation.
Ze'ev Schiff, a security specialist on the daily Ha'aretz, says the Palestinian leader is saying to the US that he is willing to act against Hamas but that "now Israel has to do its part by halting the construction of Har Homa and the expansion of the settlements."