GAZA CITY, Gaza Strip - Two armed Palestinians in wetsuits and flippers emerged from the Mediterranean and fired toward a beachfront Israeli settlement before being killed by Israeli troops in a gun battle, the army said today.

The Islamic militant group Hamas claimed responsibility for the shooting on the Tel Katifa settlement in Gaza. Hamas has threatened to carry out attacks on Israelis to avenge the assassination of its founder, Sheik Ahmed Yassin.

The settlement attack is the first of "earthshaking operations to come," a Hamas leaflet said. In a farewell video, the attackers posed in their wetsuits, goggles pulled above their foreheads. The video also contained footage of a training session in which two men charged toward a rocky cliff, firing assault rifles.

In a West Bank refugee camp, meanwhile, a Palestinian militant was killed today when a car he was driving exploded. Palestinian security officials said the car was carrying explosives. Israel's military denied any involvement in the blast.

In the Gaza attack, the assailants came ashore late Thursday. From the beach, they fired assault rifles and rocket-propelled grenades toward the Israeli army post guarding the settlement, and soldiers returned fire.

Ari Odes, a Tel Katifa resident, said he and his wife were driving toward the settlement when they heard shooting. Moments later, he saw the attacker on the road, aiming at the car, Odes told Israel Radio.

"I pulled my head down and tried to aim the wheel so as to run him over but he jumped onto the shoulder of the road and I drove into the settlement," Odes said. "There was a second terrorist who shot massive fire at the gate of the settlement and the outpost."

The army initially said three Palestinians were shot, but only found two bodies after daybreak. Troops also found the attackers' flippers on the beach, near the settlement, the military said.

Tensions have increased significantly since Israel assassinated Yassin on Monday. The group has vowed bloody revenge, saying even Prime Minister Ariel Sharon is a target.