JERUSALEM (AP) -- A bomb struck a crowded bus stop in central Jerusalem Wednesday, killing one woman and wounding more than 20 other people in what authorities said was the first major Palestinian militant attack in the city in several years.

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The bombing brought back memories of the second Palestinian uprising last decade, a period in which hundreds of Israelis were killed by suicide bombings in Jerusalem and other major cities.

There was no immediate claim of responsibility, but Israeli police blamed Palestinian militants. The attack came against the backdrop of a rising wave of violence that has threatened to upset more than two years of relative calm that has prevailed since an Israeli offensive in the Gaza Strip.

Earlier this month, five members of a Jewish settler family were knifed to death in their sleep at their West Bank home. And in recent days, Israel has carried out reprisals in Gaza in retaliation for rocket and mortar fire launched into southern Israel. On Tuesday, an errant Israeli strike meant for Palestinian militants killed four members of a Palestinian family in Gaza.

Adding to the tensions, peace efforts with Hamas' rival, the Western-backed Palestinian government in the West Bank, have been stalled for months. Palestinian leaders condemned the attack.

Israel's Defense Minister Ehud Barak hinted that Israel would retaliate against Hamas, the militant group that rules Gaza. At least three rockets landed in the southern city of Beersheba on Monday, and mortar shells were landing in southern Israel late in the afternoon.

"We will not tolerate the harming of Israeli citizens, not in the south and not in Jerusalem," Barak said. "Hamas is responsible for the firing of rockets toward Beersheba today and this responsibility has a price."

The 3 p.m. bombing occurred near the main entrance to Jerusalem, next to the city's central bus station and main convention center, an area that is crowded with travelers and passers-by. The bomb went off next to the a food stand ironically called, in a Hebrew play on words, "a blast of a kiosk."

The blast reverberated throughout Jerusalem and blew out the windows of two crowded buses. Rescuers removed bloodied people from the area on stretchers, as sirens from speeding ambulances wailed in the background.

"We are talking about a terror attack," said police spokesman Micky Rosenfeld.

He said a 60-year-old woman died from her wounds. Israel's national rescue service said some 24 others were wounded, including three in critical condition.

Jerusalem's police chief, Aharon Franco, said that the bomb was about four pounds (one to two kilograms) and was planted in a small bag on the sidewalk. He said security services were on alert for additional attacks.

He said authorities had no firm leads but were investigating a possible link to a small bombing earlier this month that wounded a garbage collector as he removed the device from a trash can.

"I saw kids crying on the street, lying in blood on the side of the road," said one man who witnessed the blast. Crying on the telephone, he frantically tried to reach his daughter, calming down a bit when he found out she was safe. The man, trembling in shock, refused to give his name.

Radio and TV stations posted emergency numbers for concerned citizens to inquire about relatives.

Meir Hagid, one of the bus drivers, said he heard a loud explosion as he drove by the site, located near the main entrance to Jerusalem and its central bus station.

"I heard the explosion in the bus stop," he said. He halted his vehicle and people got off. He said nobody in his bus was hurt.

Samuel Conik, 20, said he ran to the scene when he heard the explosion and saw fire coming out of a phone booth. Nearby was a badly burned man with bloody legs and his skin peeling off.

At the scene, a group of ultra-Orthodox Jews began chanting "Death to Arabs."

Eli Yishai, Israel's interior minister, rushed to the scene and called for swift Israeli retaliation. "With these murderers, these terror organizations ... we must act, or we will lose our deterrence," he told Channel 2 TV.

Prime Minister Benjamin Netanyahu's office said the Israeli leader had decided to delay a planned trip to Moscow for several hours to deal with the crisis.

Police, accompanied by sniffer dogs, broke into cars near the site to search for evidence and possible additional explosives.

The Palestinians are divided between two rival governments, the Hamas regime in Gaza and the Western-backed Palestinian Authority in the West Bank. The West Bank government seeks peace with Israel, though talks broke down last September.

In the West Bank town of Ramallah, Palestinian Prime Minister Salam Fayyad condemned the bombing "in the strongest terms." His boss, President Mahmoud Abbas, who was traveling in Russia, issued a similar condemnation through his office.

In the Gaza Strip, the Islamic Jihad militant group, which has carried out dozens of attacks, said it was not connected to the blast. But spokesman Khader Habib said the group "applauds all efforts to respond to the crimes committed daily against our people."

Jerusalem suffered dozens of suicide bombings that targeted buses and restaurants during the second Palestinian uprising last decade. But the attacks have halted in recent years. Jerusalem last experienced a suicide bombing in 2004, and the last suicide bombing in Israel occurred in 2008 in the southern town of Dimona.

Even so, the city has experienced other deadly violence. In early 2008, eight students at a Jerusalem seminary were killed when Palestinian gunmen entered the school and opened fire.

Palestinians also carried out several attacks with construction vehicles against Jerusalem in the past few years that ended with fatalities when the drivers rammed their vehicles into bystanders.