Qatar announced on Thursday its decision to shut down an Israeli trade mission in the capital, Doha.
The decision was made after an Israeli helicopter attack on a truck carrying Palestinian commanders in the West Bank - one was killed and another critically injured.
Two passers-by were also killed and several others injured.
Palestinians have promised a tough response to the attack.
In Doha, Dr Nabil Shaath, a senior Palestinian minister, called the killings, "premeditated murder" by an "assassination squad" - and referred to the attack as a war crime.
Also speaking in Doha, Syria's Foreign Minster Farouk Shara'a said Israeli's actions were unacceptable and broke international law.
Qatar is hosting a summit by the Organisation of Islamic Countries (O-I-C) which is due to begin on Sunday - although foreign delegates were already arriving on Thursday.
The decision by Qatar to close the trade office followed intense pressure from the Middle East powerhouses Saudi Arabia and Iran, as well as Libya and other Muslim countries invited to the summit.
They called for greater support of the Palestinian people in their fight against Israel.
Iran and Saudi Arabia threatened to boycott the gathering if Qatar did not shut down the low-level office.
Qatar is the only Gulf state with ties to Israel and relations between the two are based solely on the trade mission.
It's not clear whether Qatar now plans to completely sever relations with Israel.
The decision to close the Trade Office was welcomed in Doha by Iran's Deputy Foreign Minister, Dr Jawad Zarafi.
In Tehran, an official statement announced that President Mohammad Khatami would now attend the summit.
The two-storey Doha villa that Israel used as a trade office became the focus of discussions at a ministerial meeting that was originally scheduled to discuss the plight of Palestinians.
Earlier on Thursday, an Israeli combat helicopter rocketed a pickup truck full of Palestinian commanders, killing one and critically wounding another.
The Israeli army said the attack, made in Beit Sahour in the West Bank, was part of a new policy to target ringleaders behind the clashes.
Two passers-by were killed and 11 others were injured.
These latest killings have occurred just when U-S President Clinton was set to convene another round of talks aimed at resuscitating the peace negotiations.
"This is a premeditated Israeli murder. They continuously have been targeting our young people to shoot and kill. This is an assassination squad. This is not an organised army. This has been escalated. It is a war crime and has to be really punished. The Israelis have no right to pursue our people and kill them cold-bloodedly like this."
SUPER CAPTION: Dr Nabil Shaath, Minister of the Palestinian State
"We welcomed the decision of the government of Qatar to close the Trade Office of the Zionist regime. We believe that this is the correct decision on the part of the chairman of the ninth summit. This is a decision of the entire Islamic nation and for this President Khatami is going to participate in this ninth summit."
SUPER CAPTION: Dr Jawad Zarafi, Iranian Deputy Foreign Minister
"We should not accept the Israeli actions which are above international law. Israel should obey international law and should be held responsible for what is taking place in the occupied territories."
SUPER CAPTION: Farouk Shara'a, Syrian Foreign Minster