Senior naval and intelligence sources told reporters 36 CD-Roms with instructions for making bombs and other guerrilla techniques were found on the ship, as well as rocket fuses and remote detonator devices.

The Abu Hassan, a small 50-foot fishing boat, was intercepted in international waters and towed back to the port of Haifa on Wednesday, the sources said.

Mohammad Salem Abu Amar, a member of the Lebanon-based fundamentalist Shiite militia Hezbollah was arrested aboard the ship, as well the seven other crew members, the sources added.

"As part of the Israeli defence forces' ongoing war on terror emanating from the seas, special navy forces conducted a search on a vessel moving suspiciously in the waters west of Haifa," an army statement said.

Military sources said it was the first time they had evidence Hezbollah was sending its members to the territories rather than having Palestinian militants go to Lebanon for training.

"This is a change in strategy, they are trying to take peple from Lebanon and penetrate them into Palestinian Authority territory. It's the first time we have caught a Hezbollah member coming in," a senior naval officer told reporters.

The weaponry found on the boat appears to be negligible in quantity and the military sources stressed that "the whole operation was aimed at bringing Abu Amar" to the Gaza Strip.

His nationality was not immediately knwon but the military officials said he was a resident of Lebanon and planned to enter the Gaza Strip from Egypt and through smuggling tunnels dug under the Israeli-controlled border.

The officials also said that among the seven fishermen, one of them had links with senior officials from the Palestinian naval police.

Israeli Foreign Minister Silvan Shalom accused Palestinian leader Yasser Arafat of being involved in the smuggling attempt.

"This is a new attempt to smuggle weapons and instructions for terror attacks, and there is no doubt Arafat was involved as he was in previous cases," Shalom told Israeli public television.

"After the Karine A affair, he became irrelevant for the Americans. I hope that after today's seizure he will become irrelevant for the Europeans," he added.

Top Arafat adviser Nabil Abu Rudeina lashed out at Israel over the accusations and told AFP they "were part of Israel's campaign against Arafat and aimed at covering up the fact that Israel is refusing the roadmap" for peace.

On January 3, 2002, Israel intercepted a 50-tonne shipment of Iranian weapons aboard the Karine A destined for the Palestinians in the Red Sea.

Arafat admitted responsibility for the smuggling attempt, and the affair seriously eroded his standing with Washington.

Arafat's financier, who was accused of helping plan the smuggling, was imprisoned in the West Bank town of Jericho under US and British supervision in a deal to lift the Israeli siege of the Palestinian leader's Ramallah base in May.

On May 7, 2001, the navy also intercepted the Santorini near Rosh Hanikra along the Israeli-Lebanese border. It was carrying arms to Palestinians in the Gaza Strip.

Israel said the shipment was sent by Ahmad Jibril's Damascus-based PLO offshoot, the Popular Front for the Liberation of Palestine General Command.

The ship, which came from Lebanon, was packed with 40 tonnes of anti-aircraft missiles, Katyusha rockets, SA-7 missiles, anti-tank grenades, mortar shells and automatic weapons.

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