Israel has accused Iran of funding the suicide bombing in a Tel Aviv café which injured more than 30 people on Thursday.
Shaul Mofaz, the Defence Minister, also pointed the finger at Syria, saying the bombing by an Islamic Jihad cell operating out of Nablus had been carried out on the direct orders of the faction's headquarters in Damascus. Thirteen of the injured were still in hospital yesterday.
Mr Mofaz said the Israeli defence establishment, which is currently stepping up its calls for UN sanctions against Iran's nuclear programme, had "decisive proof that the attack in Tel Aviv was a direct result of the "axis of terror" that operates between Iran and Syria".
He added: "Iran supplied the money, and [Islamic] Jihad's headquarters in Damascus directed the organisation's operatives in Nablus, giving operational orders and instructions."
Israeli sources said the government has already given details of the intelligence behind Mr Mofaz's statements to the United States, the European Union and Egypt. The decision to share the information was reportedly intended to strengthen the case for a reference of Iran to the UN Security Council over its nuclear programme.
Mr Mofaz said the attack happened at a time when the Iranian President, Mahmoud Ahmadinejad, was in Damascus meeting the Syrian President, Bashar al-Assad, a meeting he termed "the terror summit".
Israeli media reported that Mr Mofaz had ordered his forces to continue their operations against Islamic Jihad and other militants regarded as "ticking timebombs" because they are suspected of preparing operations against Israel.
Israel had been planning to reduce its presence in major West Bank cities in the run-up to Palestinian parliamentary elections scheduled for Wednesday.
In a strongly worded condemnation immediately after Thursday's bombing, Mahmoud Abbas, the Palestinian President, suggested that the bombings were indeed directed at trying to ensure maximum disruption of the Palestinian Legislative Council elections.
After their meeting, the Iranian and the Syrian presidents issued a statement which endorsed attacks on Israel. It said: "Continuing the resistance is the only way to restore the legitimate rights of the Palestinian nation and put an end to the occupation of holy Islamic lands."
Mr Mofaz said: "Damascus is the only place where the Iranian President is still welcomed. The Iranian-Syrian terror axis is not Israel's private problem."
While Israel is anxious to highlight the threat from Iran at a time when the West is discussing possible sanctions, accusations that Tehran is funding Islamic Jihad operations have also been made by Palestinians in the past.
Nasser Juma, a prominent former militant in Nablus, who is a Fatah candidate in the coming elections, said last month that Islamic Jihad was under pressure from Iran to continue operations against Israel to keep Iranian funds flowing.
Mr Mofaz's accusation against Iran came as Iranian officials confirmed that Tehran was moving assets from European banks in a move interpreted as seeking to protect them against possible UN sanctions. An unnamed senior Iranian official told Reuters: "Yes, Iran has started withdrawing money from European banks and transferring it to other banks abroad."
Earlier, the Central Bank governor, Ebrahim Sheibani, was quoted as saying that Tehran had started shifting funds, but he declined to say whether the assets would go to accounts in Asia. "We transfer foreign reserves to wherever we see as expedient," Mr Sheibani told the ISNA news agency. "On this issue, we have started transferring. We are doing that."
Meanwhile, an Israeli delegation, headed by the National Security Council director, Giora Eiland, appared to make little headway in persuading Russia to back immediate sanctions during a long planned meeting intended to increase dialogue between Moscow and Jerusalem. Diplomatic sources said the Russians had listened "very intently" to the Israeli representations during the exchanges in Moscow.Reuse content