It was the first time Israel had struck so far inside Syrian territory since the 1973 Middle East war, military commentators said.

"The Israel Defence Forces operated last night deep inside Syrian territory and hit a training base used by terror groups, including Islamic Jihad," the army said about the air attack at Ain Saheb, about 20 km (12 miles) northwest of Damascus.

But Syria said the strikes hit refugees living near the Lebanese border.

Terming it a 'serious escalation', Syria said it sent an urgent complaint to the United Nations Security Council over the air raid, the first direct military confrontation between Israel and Syria since the Yom Kippur war exactly 30 years ago.

"Israel attacked a civilian area", Damascus told UN chief Kofi Annan in a message, and demanded an urgent UNSC meeting.

Palestinian sources reported casualties, but there was no official confirmation.

In another Israeli strike, one Palestinian was killed and two others were wounded Sunday after being shot by Israeli soldiers in the southern Gaza Strip, according to Palestinian medical sources.

Said Abu Azzum, 29, was killed and two other men injured near a roadblock close to the Morag settlement, according to witnesses.

Palestinian security sources said the incident happened as Israeli army bulldozers were levelling land in the area.

The Israeli air force went into action a day after a female suicide bomber from Islamic Jihad killed 19 people in a beach restaurant in the northern Israeli city of Haifa.

Israel said it did not intend to pick a fight with Damascus, on the eve of the 30th anniversary of the 1973 Middle East war, but wanted the air strike to serve as a warning to stop Palestinian militant groups from operating on Syrian territory.

"The attack carried out by our air force some 15 kilometres north of Damascus is a warning aimed at making Damascus understand that all those who abet and support terrorism no longer enjoy any immunity wherever they are," Israeli Prime Minister Ariel Sharon's spokesman Raanan Gissin told AFP.

"Syria can only blame itself because it refused to deliver on the commitments it made to the United States after the Gulf war to close down the headquarters of terrorist organisations based on its soil," he added.

Military sources said the Israeli air force destroyed its targets in a base which they said was used by militants from Islamic Jihad and Hamas, as well "some elements of Al-Qaeda", Osama bin Laden's terror network.

Islamic Jihad denied that it had any fighters in Syria, while Syrian and other sources said Israel hit a camp which had been used by members of the leftist Popular Front for the Liberation of Palestine-General Command (PFLP-GC).

A Syrian academic close to the government said earlier yesterday that the Israeli air strikes hit the Ain as-Saheb region west of Damascus where refugees are living near the Lebanese border.

"The operation carried out in the night at Ain Saheb constitutes a violation of the disengagement accord signed by Syria and Israel in 1974," political analyst Imad Shwaybi said.

Shwaybi accused Israel of "playing with fire," adding, "Israel is going to be lectured, particularly by the United States, which is stuck in an impasse in Iraq."

"If Syria goes to the UN Security Council, the American side will be embarrassed because everyone is looking at this affair and that is not in the interests of the United States," said the Damascus university professor.

A Syrian official in Syrian-controlled eastern Lebanon told AFP the target was an abandoned training camp used by a "leftist Palestinian group."

The camp used to serve the Popular Front for the Liberation of Palestine-General Command (PFLP-GC), a radical group based in Damascus and headed by Ahmad Jibril, according to Lebanese shepherds who graze their flocks east of Baalbeck, in an area on the Syrian border.

The shepherds told AFP that flares and flashes from bombs lit up the sky over that area during the night.

Since the fall of Iraqi leader Saddam Hussein in April, Washington has stepped up pressure on Syria to crack down on terrorism.

Damascus said it had forced 10 radical Palestinian organisations to close, including the offices of Islamic Jihad and Hamas in the capital, after a visit by US Secretary of State Colin Powell on May 3.

Some 450,000 Palestinian refugees live in Syria, most of whom sought shelter there after the wars in 1948 and 1967.