The attack at Jerusalem's Jaffa Gate (pictured above) on Wednesday added to a series of stabbings, shootings and car-ramming assaults since September that have claimed the lives of 19 Israelis, an American and an Eritrean, as well as 125 Palestinians.

Israeli police said a border policewoman, who had seen assailants armed with knives stabbing a man, had opened fire "towards the terrorists and neutralized them."

A restaurant owner said six shots were heard.

The Israeli who died from gunshot wounds was later identified by medics as a 46-year-old married father of two from Jerusalem.

Hospital officials said a third Israeli, with serious stab wounds, was in intensive care but out of danger after surgery.

'Continuous' attack

Prime Minister said Israel would win what he called a "continuous terrorist attack."

Palestinians say the violence stems from their frustration at nearly five decades of Israeli military rule coupled with the collapse of US-sponsored peace talks.

Israel says the violence stems from a Palestinian campaign of incitement.

Cell discovered, says Shin Bet

Also on Wednesday, Israel's Shin Bet intelligence agency said it had arrested 25 suspected members of the militant Islamist group Hamas, who had operated in the West Bank and Israel, directed from Gaza.

There was no immediate comment from Hamas, which rules the Gaza Strip.

Shin Bet said the suspects ran an explosives laboratory in Abu Dis, east of Jerusalem, and intended to carry out suicide bombings inside Israel.

ipj/gsw (AP, Reuters, AFP)