Israel says it has no plans to carry out an immediate military operation in response to Monday's Palestinian suicide attack that has left nine people dead, not including the bomber.
Media say Israeli Defense Minister Shaul Mofaz opted to delay military action in a meeting with security officials.
Hours earlier, a bomber with the militant group Islamic Jihad detonated explosives at a fast food stand in Tel Aviv. At least 60 people were wounded.
The Palestinian militant group Hamas, which now controls the Palestinian government, defended the bombing.
But the United States, which called the attack "a despicable act for which there is no excuse," condemned Hamas for condoning the blast. U.N. Secretary General Kofi Annan condemned the bombing and urged the Palestinian Authority to take a clear stand against what it called "such unjustifiable acts of terrorism."
Palestinian Authority President Mahmoud Abbas also condemned the attack and called on the international community to help end what he called a grave deterioration in the region.
It was the first suicide bombing in Israel since Hamas won elections and took over the Palestinian government nearly three weeks ago.
A U.S. State Department spokesman (Sean McCormack) says the Hamas-led government encourages teenagers to strap explosives on themselves to try to kill innocent civilians.
Palestinian militant groups have threatened in recent days to strike Israeli targets, to avenge the deaths of 18 Palestinians killed this month in Israeli air and artillery strikes in the Gaza Strip.