WASHINGTON, 16 June — Former US military and State Department officials say Israel was arming three diesel submarines with newly designed cruise missiles that could carry nuclear warheads, The Washington Post reported yesterday.

The development would give Israel a sea-based alternative to land or air-based nuclear weapons. The nation has refused to say if it has nuclear weapons but US analysts say it has a small atomic arsenal.

Israeli testing of the new cruise missile two years ago in the Indian Ocean near Sri Lanka was monitored by the US Navy, according to former Pentagon officials.

Although US analysts studied the nuclear capability of the missile, it was “above top secret whether the sub-launched missiles are nuclear-armed,” one former senior American official was quoted as saying.

A sea-based option would allow Israel to offset efforts by Iraq and Iran to develop missiles capable of knocking out Israel’s weapons, the newspaper said.

The newspaper report followed publication of a book this week by the Carnegie Endowment for International Peace that said Israel attempted to arm its diesel submarines with nuclear cruise missiles. The book said Israel tested its sea-launched cruise missiles, with a range of 900 miles, in May 2000.

“Probably the most important nuclear-related development in Israel is the formation of its sea-based nuclear arm,” wrote Joseph Cirincione, co-author of the book.

Meanwhile, Israeli troops stormed the West Bank town of Jenin yesterday in the latest operation. Palestinian security sources said a dozen tanks, covered by two helicopter gunships, had entered Jenin and that an exchange of gunfire had ensued.

They did not say whether there were any casualties in the operation, which an Israeli Army spokesman said was “launched following information on preparations in Jenin of anti-Israeli attacks.” By afternoon, troops had pulled out of the area, the army said. More than two dozen Palestinians were arrested. The army also pulled out of Tulkarm and its refugee camp yesterday morning.

As the cat-and-mouse game continued in the West Bank, Bush was to examine the best way toward a Palestinian state as he readies his planned policy statement that could be announced within days.

In another development, Israeli construction teams were due today to start building a security fence past the town which is intended to prevent the infiltration of bombers into the Israeli heartland.

The fence will reportedly run 110 km in length at a cost of about one million dollars per km. Residents of the Gilboa region in the north of the West Bank have complained that the fence will not shield their region too as was originally planned, media reports said. Sources in the Israeli Defense Ministry, however, said the barrier will likely be extended to an extra 25 km in that direction.

The Israeli newspaper Haaretz said Jewish settlers have demanded that the fence around the Palestinian-controlled areas is built inside the West Bank and not along the border as it existed in 1967.

Conservative Israelis are opposed to its construction, which they regard as a first step toward the political division of the West Bank and the creation of a Palestinian state. The Palestinians also reject the fence saying it intrudes into their areas of the West Bank and prompts fears of further restrictions of movement for the Palestinian population.

Israeli forces blew up a booby-trapped car found parked outside a fenceline stretching along two Jewish settlements in the northern Gaza Strip, an Israeli military source said yesterday.

In the evening yesterday, two Israelis were killed and two others wounded by a Palestinian who opened fire outside a Jewish settlement in the Gaza Strip before being shot dead, Israeli military and settler sources said.

In Brussels, an EU spokeswoman said the European Parliament has frozen a $17.7 million grant to the Palestinian Authority until the Palestinian leadership says what it will do with the money.