JERUSALEM, Feb. 27 (Xinhuanet) -- Israeli Prime Minister Ariel Sharon on Sunday demanded the Palestinians wipe out terrorist groups after a Tel Aviv suicide bombing, threatening he would freeze peace efforts if the Palestinians fail to do so.

   "There will not be any diplomatic progress, I repeat, no diplomatic progress, until the Palestinians take vigorous action to wipe out the terror groups and their infrastructure in the Palestinian (National) Authority (PNA)'s territory," the prime minister said before a weekly cabinet meeting.

   Addressing his cabinet members, Sharon said leaders of the Palestinian Islamic Jihad (holy war) Movement in Syria ordered the attack that killed four Israelis Friday evening and Syria was also involved in the attack.

   Sharon said Abbas' "immediate test" after the bombing outside a Tel Aviv nightclub was to act against Islamic Jihad, which claimed responsibility for the attack.

   The violence, which is the first deadly Palestinian attack on Israel since November last year, shattered a de facto truce that had raised hopes for peace in the region.

   "Israel has recently shown restraint to allow progress," Sharon told the cabinet in broadcast remarks. 

   "But it's obvious that without a vigorous Palestinian  Authority operation against terror, Israel will have to step up its military activities that are aimed at protecting the lives of Israeli citizens," he said. 

   Sharon did not elaborate what kind of military actions, but Israeli Deputy Defence Minister Ze'ev Boim said if Abbas did not rein in militants, the Israeli military would "resume all tactics," including assassinations of Islamic Jihad leaders. 

   Israel could strike Syria, but growing international pressure on Damascus could be more effective in curbing what he called its support for terror, Boim was quoted as saying by Israel Radio.

   Signalling Israel was likely to hold its fire with Syria, Vice Prime Minister Shimon Peres said "Syria is involved in many terrible things and the United States is at the moment leading the initiative against Syria."

   "We should allow the Americans to do this," he said.

   In Damascus, a Syrian Foreign Ministry official said the Tel Aviv attack contradicted the government's policy.

   "Syria has been supporting the efforts of ... Abbas in creating an environment that would allow for peace and the creation of a Palestinian state and we will continue to do so," the official said.

   Meanwhile, Defense Minister Shaul Mofaz told the cabinet that Israel had given the PNA a list of wanted men, mainly from Islamic Jihad, in the wake of the bombing, Israel Radio said.

   On the Palestinian side, Palestinian Prime Minister Ahmed Qurei responded to Sharon's threats by saying it's Israel's decision whether to freeze contacts with PNA.

   "We will not shed tears, but we say that after Sharm el-Sheikh there is a chance (for peace) and we would like to press ahead with this effort," Qurei said.

   The PNA strongly condemned the bombing and said it had arrested three suspects in the West Bank on Saturday. 

   Abbas, a moderate who won presidential election on Jan. 9 as the late Yasser Arafat's successor, has pursued a dialogue with militants on ending violence, arguing that confronting them would cause civil strife. 

   Palestinian militant groups had refused to be bound by a ceasefire Sharon and Abbas declared at the ground breaking summit in Egypt's Red Sea resort of Sharm el-Sheikh on Feb. 8 but said they would abide by a de facto truce that preceded the meeting. Enditem