Associated Press WriterJENIN, West Bank (AP) -- Prime Minister Ariel Sharon toured the scene of the deadliest West Bank fighting Wednesday and said he would press ahead with his military offensive until Palestinian militias have been crushed -- despite U.S. pressure to pull back troops and a cease-fire mission by Secretary of State Colin Powell.

Sharon spoke at an army command post overlooking the Jenin refugee camp hours after an Islamic militant, apparently a resident of the camp, blew himself up on a bus near the Israeli port city of Haifa, killing eight passengers.

On Tuesday, 13 Israeli soldiers were killed in a sophisticated Palestinian ambush in the camp, the army's biggest single combat loss since 1983. In choosing the setting of the Jenin army base, just hours after the Haifa bombing, Sharon appeared to be amplifying his message that Israel could not call off the campaign at this stage.

Speaking to cheering soldiers, Sharon said he explained to President Bush that "we are in the middle of a battle."

"If we leave, we will have to return," Sharon said. "Once we finish, we are not going to stay here. But first we have to accomplish our mission."

Earlier in the day, Israel's security Cabinet affirmed the decision to continue with the offensive, and troops moved deeper into Jenin and another refugee camp. In the Jenin camp, about 300 Palestinians, including armed men, women and children, surrendered Wednesday, and residents said the streets of the shantytown of 13,000 were largely deserted. By nightfall, there were no signs of Palestinian resistance.

In Madrid, meanwhile, Powell insisted that his peacekeeping mission was not threatened by Sharon's refusal to halt military incursions in Palestinian areas. "My mission is not in the least in jeopardy," Powell told a news conference.

Powell, who arrives in Jerusalem on Thursday, said he still intends to meet with both Sharon and Palestinian leader Yasser Arafat. Sharon has said Powell would be making a "tragic mistake" in meeting with Arafat, who has been confined by Israel to a few rooms at his West Bank headquarters for the past two weeks.

The Palestinians said they would demand of Powell that he secure Israel's immediate withdrawal from Palestinian areas.

Wednesday's suicide bombing near the northern port city of Haifa was the fourth such attack since Israel launched "Operation Defensive Shield" on March 29 in an attempt to crush Palestinian militias.

The new bombing might help Sharon justify prolonging the offensive, which has received widespread support among Israelis fed up with persistent terror attacks.

The Islamic militant group Hamas claimed responsibility for the Haifa bombing, and sources in the group identified the assailant as Ayman Abu Haija, 22, from the Jenin refugee camp. It was not clear when Abu Haija left the camp which has been under Israeli siege for a week.

The bus blast went off at about 7:15 a.m. during morning rush hour, when the bomber detonated explosives strapped to his body shortly after boarding the crowded bus.

Witnesses said the blast lifted the bus a few feet into the air. Much of the roof was peeled back, windows and tires were blown out, and the front of the bus was a twisted wreck. Rescue workers arriving at the scene within a few minutes covered several bodies lying on the highway with sheets and blankets. Personal belongings were strewn across the asphalt, including an olive-colored jacket normally worn by soldiers, a skullcap and an identity card.

Eight passengers, including four Israeli soldiers, were killed, in addition to the bomber, and 14 people were wounded. "Bodies had been blown right out of the bus onto the road," said a witness, Rami Solomon. One of the dead was Noa Shlomo, 18, a niece of Israel's ambassador to the United Nations, Yehuda Lancry, police said.

In the Jenin camp, dozens of gunmen holed up in a small area fired sporadically Wednesday morning at Israeli troops advancing with bulldozers.

A Hamas leader in the area, Jamal Abdel Salam, said he received a phone call at mid-morning from a member of Hamas' military wing who informed him he and his comrades had run out of ammunition. "This is the last call," Abdel Salam quoted the gunman as saying. "We are in a group inside a house. They (the Israelis) are at the door and they are coming to arrest us. Take care of my family."

Later Wednesday, about 300 camp residents surrendered to Israeli troops. Camp resident Ahmed Jaradat fled his home with his wife and six children. "We got out when they (Israeli soldiers) said to come out on loudspeakers," Jaradat said.

An Associated Press photographer driving through the camp saw many building facades with wreckingball-sized holes, from Israeli shelling. The streets were deserted, and there was no sign of Palestinian resistance.

The Palestinian leadership said Thursday should be set aside in the Arab and Islamic world to "honor ... those who have resisted the aggression on Jenin." Hamas leader Ahmed Yassin called for a day of fasting and prayer.

On Tuesday, 14 Israeli soldiers were killed in the Jenin camp -- 13 in an ambush and one in fighting later in the day.

The soldiers had stumbled into a sophisticated trap prepared by Palestinian gunmen. A group of soldiers entered the courtyard when dozens of linked charges went off, possibly detonated by a suicide bomber. The force and other soldiers rushing to their rescue then came under fire from gunmen on nearby rooftops.

More than 100 Palestinians are believed to have been killed in the Jenin camp, with many bodies still lying in the streets. Among those reported dead was Mahmoud Tawalbeh, a leader of the militant Islamic Jihad group. Tawalbeh, 23, has masterminded a number of suicide bombings in Israel.

In the West Bank city of Nablus, rescue workers on Wednesday retrieved the bodies of 14 Palestinians killed in the fighting, bringing the total of dead in the city since the start of the Israeli invasion to 60. The old city of Nablus, a warren of narrow alleys, had been a flashpoint, with battles raging there for several days.

On the outskirts of Nablus, Israeli tanks and helicopters shelled the Al Ain refugee camp, damaging some homes. After daybreak, soldiers called over loudspeakers on teen-age boys and men to come out of their homes, and witnesses saw hundreds of Palestinian men sitting on the ground in front of the camp's mosque.

In the West Bank town of Ramallah, four bodies were retrieved Wednesday, including that of one of Arafat's kitchen staff, who was killed more than a week ago in fighting at the Palestinian leader's besieged compound.

The Israeli military said that since the start of the offensive, 28 Israeli soldiers have been killed, but has not provided a list of Palestinian casualties. The Palestinian Red Crescent said Tuesday that at least 128 Palestinians have been killed and 337 wounded, but that the toll was expected to rise significantly.

The army said it has detained more than 2,100 Palestinians, including 117 on Israel's wanted list, and confiscated nearly 2,500 rifles.

Israel eased Arafat's isolation slightly Wednesday, permitting him to meet with several senior aides in advance of the Powell mission. Later in the day, the Palestinian officials met with U.S. envoy Anthony Zinni.

Palestinian Parliament Speaker Ahmed Qureia had said the Palestinians would demand that Powell secure an immediate Israeli withdrawal from Palestinian areas, and that U.S. mediators come up with a timetable for carrying out a cease-fire.

Israel withdrew from two Palestinian towns earlier this week, but forces remain in four others.

In the West Bank town of Bethlehem, a standoff at one of Christianity's holiest sites -- the Church of the Nativity -- continued Wednesday. An Armenian monk in the compound was seriously wounded, and Israeli troops and armed Palestinians blamed each other for the incident.

Also Wednesday, Lebanese guerrillas fired more than a dozen rockets and mortars at the Israeli-annexed Golan Heights and northern Israel in one of the most extensive attacks since Israel withdrew from Lebanon nearly two years ago.

Israeli warplanes struck back with missiles fired at suspected guerrilla positions.