JERUSALEM — A suicide bombing and the issue of prisoner releases are threatening the tenuous Palestinian cease-fire.

A local branch of Islamic Jihad claimed responsibility for a suicide bombing Monday night in central Israel that killed a 65-year-old woman.

The attack followed a dispute over whether Palestinian prisoners belonging to Hamas and Islamic Jihad would be released.

On Sunday, the Israeli government approved criteria for releasing Palestinian prisoners, but Prime Minister Ariel Sharon said no Palestinian prisoners who have murdered Israelis would be released, reports said.

Palestinian groups called the measure insufficient and said the cease-fire they declared early last week could be in jeopardy unless all Palestinian prisoners are released. Israel is not obligated to release prisoners under the "road map" peace plan.

The issue of prisoners is one of the factors driving a wedge between Palestinian Authority Prime Minister Mahmoud Abbas and the Fatah movement, which is headed by Palestinian Authority President Yasser Arafat.

On Tuesday, Abbas resigned from Fatah and threatened to quit as prime minister in the face of criticism over his handling of negotiations with Israel, including the prisoner releases. Senior members of the movement believe Abbas is not being tough enough in dealing with Israeli and American officials. Abbas' moves were widely seen as an attempt to gain support for his policies.

For its part, the United States appeared poised to give $20 million to the Palestinian Authority in an attempt to shore up Abbas and build support for the road map.

After Monday night's attack, the Islamic Jihad branch identified the bomber as a resident of a Jenin-area village and said attacks would continue as long as Israel failed to release all Palestinian prisoners. But senior members of the organization in the Gaza Strip said they were checking the claim and still stood by a three-month truce to suspend attacks, reports said.

Mazal Afari was killed when a suicide bomber blew himself up in Afari's home in Moshav Kfar Yavetz.

Foreign Minister Silvan Shalom said talks with the Palestinians would continue despite the attack, which also wounded three of Afari's grandchildren.

But a spokesman for the prime minister said the bombing proves the Palestinian cease-fire is worthless. Ra'anan Gissin told Reuters that the attack underscores the need for the Palestinian Authority to crack down on terrorist groups' infrastructure.

Even before the attack, the prisoner release issue underscored the differences between the two sides.

At Sunday's Cabinet meeting, the measure passed on its third vote by a 13-8 count. The ministers agreed to the resolution after it was amended to include the creation of a ministerial committee on prisoner releases, and after a clause was added stressing that the release is dependent on Palestinian steps to meet their commitments to fight terrorism.

During the Cabinet meeting, families of terror victims demonstrated outside the Prime Minister's Office in Jerusalem against the releases.

The government decision is expected to pave the way for the release of some 400 Palestinian prisoners — about 250 administrative detainees and 135 Palestinians held for criminal offenses, reports said.

Israel is believed to hold about 4,500 Palestinians in detention, the reports said.

The Palestinian Authority's information minister, Nabil Amr, said Palestinians had expected a larger release.

"This is an insufficient step," he said, adding that the United States would be called on to pressure Israel to free all prisoners.

Hamas and Islamic Jihad went further. Hamas demanded that Israel release all its members, while Islamic Jihad said the decision led the group to question its cease-fire.

On Monday, Israel's justice minister rejected a request for a broader release. After a meeting Monday with Palestinian Authority ministers, Yosef "Tommy" Lapid said a general release was impossible because Hamas has said it will return to violence when the three-month cease-fire ends.

At Sunday's meeting between Defense Minister Shaul Mofaz and the Palestinian security chief, Mohammed Dahlan, the Palestinians reportedly demanded that the Israeli military redeploy from three more Palestinian cities, including Ramallah, and lift the blockade that still remains in effect around Bethlehem, the report said.

Mofaz, an outspoken critic of the road map, said there have been fewer terror alerts since Israel handed over security responsibility to the Palestinians in the West Bank town of Bethlehem and parts of the Gaza Strip.

He also said after the talks that he came away with the impression that the Palestinians want to renew the peace process, Israel Radio reported.

But Mofaz said Palestinian leaders would be judged on their actions, not their words.