The decision to revoke the Palestinians' permits on Thursday came in response to one of the deadliest attacks carried out by Palestinians in recent months. Two gunmen opened fire in an open air market near the Israeli military headquarters on Wednesday night, killing four and wounding at least five others in the capital, Tel Aviv.

Some 83,000 Palestinians in the West Bank and Gaza Strip will be affected by the suspension of permits.

The decision was announced by the COGAT Israeli defense agency. Palestinians use the holy month to visit family members in Israel, attend prayers in Jerusalem and travel abroad from Tel Aviv airport.

Israel has also suspended work permits for 204 of the attackers' relatives.

The West Bank village of Yatta, home to the attackers, is also under lockdown by Israeli security, with no one allowed to leave or enter the village except in humanitarian or medical emergencies. The village has become a flashpoint for violence in recent months.

Hamas, the Islamic militant group that rules Gaza, did not claim responsibility for the attack but welcomed it nonetheless. Hamas official Mushir al-Masri called the shootings a "heroic operation." The group later issued an official statement promising more "surprises" during the holy month of Ramadan.

Palestinian President Mahmoud Abbas condemned the violence. A statement from his office said it "stands against attacks on civilians, regardless of its sources and justifications."

A terror attack

Meital Sassi told Channel 10 TV she was out with her family celebrating her son's birthday at the Sarona Market when she heard shots and "immediately understood it was a terror attack."

"We ran like lightning with the baby and the stroller," she said. "I yelled at people who didn't understand what was happening to run."

Revoking the thousands of permits comes just a week after Israel announced it would ease restrictions on Palestinians' movement from the West Bank and Gaza during Ramadan.

As many as 500 Palestinians from Gaza were expected to attend Friday prayers at the Al-Aqsa Mosque in east Jerusalem, which is controlled by Israel. The mosque, one of Islam's holiest sites, is located at the Temple Mount, one of Judaism's holiest sites.

Escalating violence has killed at least 207 Palestinians, 28 Israelis, two Americans, an Eritrean and a Sudanese since October.

Most of the Palestinians killed were carrying out knife, gun or car-ramming attacks against security officials or civilians, according to Israeli authorities. Others were killed in clashes or by Israeli airstrikes in the Gaza Strip.

Most of the attacks have occurred in east Jerusalem or the West Bank, territories seized by Israel after the 1967 war. Palestinians want the occupied land for their future state.

bik/sms (AP, AFP)