JERUSALEM – Israel held back from authorizing military strikes against the Hamas-led Palestinian Arab government yesterday, despite holding it responsible for Monday’s suicide bombing in Tel Aviv.

Defense officials are believed to have drawn up a list of Hamas targets that could be attacked, although Israel’s interim prime minister, Ehud Olmert, is staying his hand.

Military strikes on Hamas would end the cease-fire agreed 15 months ago after negotiations brokered by the Palestinian leader, Mahmoud Abbas, to end the second intifada.

Hamas was not behind Monday’s bombing, but its spokesmen said the attack was justified as retaliation for the Israeli occupation of Palestinian Arab land.

America had been swift to condemn the attack on Monday and President Bush added his own voice to the criticism yesterday.

“I strongly deplore the loss of innocent lives and the attack on the folks in Israel yesterday,” he said. “Our goal is to have two states living side-by-side in peace.”

But any hopes of a swift change of heart by Hamas in response to the international pressure were dashed when a Hamas leader, Ismail Haniyeh, who was recently made Palestinian prime minister, again blamed Israel for the bombing.

“The reason behind this cycle is the continuation of the occupation and the continued Israeli assaults against the Palestinian people,” he said before chairing a meeting of his new cabinet.

The Israeli cabinet discussed the possibility of military attacks on Hamas-run components of the Palestinian government.

“Mr Olmert heard the defense establishment’s ideas for possible strikes against the Palestinian Authority, and though their government is responsible for the bombing, the decision was that there should be more limited action for now,” a senior government source said.

One punitive measure that was passed was the revocation of Jerusalem residency rights of three senior Hamas officials living in East Jerusalem, downgrading them to the status of West Bank resident. The cabinet also agreed to tighten the system of Israel checkpoints dividing component parts of the West Bank, in an attempt to stop the movement of terrorists or their supporters.

Hamas yesterday announced that its government was $1.3 billion in the red. Hamas also lost a potential channel of diplomatic relief when it was denounced roundly by Paris.

Hamas had hoped France might be persuaded to drop the strict ban on contact with the Palestinian government demanded by the European Union as punishment for Hamas being a terrorist group.

But shortly after confirming that two of the nine Tel Aviv bombing victims held joint Israeli-French nationality, the foreign ministry in Paris issued a strongly worded condemnation. Hamas was criticized for failing to follow the lead of Mr. Abbas when he condemned the bombing within hours.

“We welcome the clear condemnation voiced by the president Abbas and regret that the Palestinian government did not follow his example,” a French foreign ministry spokesman, Denis Simonneau, said.