Shrapnel from the blast -- caused by a 122 mm mortar shell attached to a detonator -- tore melon-sized holes into a side of the red-and-white bus and shattered windows. Later, Israelis spraypainted the words "This is what we get for restraint," in Hebrew on the bus.
The new civilian deaths increased the pressure on Israeli Prime Minister Ehud Barak to retaliate harshly -- something he has said he was trying to avoid in order to keep the door open to a resumption of peace talks after seven weeks of Israeli-Palestinian violence.
Barak convened his security Cabinet several hours after the bombing. "This will not pass without a response," Gilead Sher, a senior adviser to Barak, told Israel army radio. Last week, Israel rocketed Palestinian command centers after deadly attacks on Israelis.
One of the victims of the blast was identified as 35-year-old, Miriam Amitai, a mother of four. Amitai was to be buried later Monday in the West Bank. Of the wounded, an adult and a child were in serious condition. One of the injured lost both legs.
Three different groups -- "Palestinian Hezbollah, "Al-Aqsa Martyrs" and "Omar al-Mukhtar" -- claimed responsibility. The first two have not been active before, and it was not clear whether they had ties to existing Islamic militant groups, such as Hamas and Islamic Jihad, which have carried out roadside bombings in Gaza in the bast. The third, Damascus-based "Omar al-Mukhtar," is a little-known splinter of a tiny PLO faction.
Hamas leader Sheik Ahmed Yassin was evasive when asked whether his group was responsible. "What happened today is a natural outcome of the many deaths on the Palestinian side," Yassin said, referring to more than 200 Palestinians killed in the recent violence. But, he added, "Our targets are not children, but the military."
The Gaza road where the mortar shell was detonated is under Israeli security control, while the surrounding area is under Palestinian rule.
The school bus left the isolated Jewish settlement of Kfar Darom in the heart of the Gaza Strip at around 7:30 a.m. Monday. Students and teachers were en route to elementary school in Gush Katif, a bloc of Jewish settlements in the south of the strip.
Three assailants hiding among bushes along the side of the road exploded the mortar shell by remote control when the bus was several dozen yards away, said an army spokesman, Maj. Yarden Vatikay. Large pieces of shrapnel hit the bus. Army officials said the bus' armor and the considerable distance between the explosion and the bus helped blunt the impact of the attack.
After the blast, the three men ran toward Palestinian-controlled land, where they were out of reach of the Israeli security forces. Army bulldozers cut down trees in the area of the attack and an armored personnel carrier took up position on the road nearby.
About 6,500 Jewish settlers live in the Gaza Strip, among 1 million Palestinians.
Jewish settlers have come under repeated attack in the current round of Israeli-Palestinian fighting. Several roadside bombs have exploded next to armored settler convoys in Gaza, and Israeli motorists have been fired on in the West Bank. Last week, four Israelis were killed in such attacks.
On Saturday, a Palestinian policeman opened fire on Israeli soldiers guarding farm land near Kfar Darom, a heavily fortified settlement of 250 people. One soldier was killed and two were wounded in the attack.
In all, Israeli-Palestinian fighting has take at least 236 lives since Sept. 28. The vast majority of the victims have been Palestinians.