EREZ, Israel (AP) _ A Palestinian bus driver today rammed his bus into a car with military license plates, killing one person, and emerged from his vehicle waving a metal bar before soldiers shot him, police said.

The driver shouted ''Allahu Akbar 3/8'' (God is great) after crashing into the military car and another vehicle, said Police Inspector Moshe Caspi.

Four people involved in the crashes were injured and treated at a hospital, army radio reported.

The incident occurred less than a mile from an army checkpoint that divides Israel from the occupied Gaza Strip.

Palestinians identified the bus driver as Mohammed Samir Katanani from Gaza's Jabaliya refugee camp, a center of the 3-year-old uprising against the Israeli occupation of Gaza and the West Bank.

Katanani, 30, had taken Palestinians to see relatives at Ashkelon prison in Israel and was driving an empty bus back to Gaza when he hit the Israeli vehicles, Arab reports said.

He was 1 1/2 miles from the checkpoint when he swerved into the left lane, hitting a Renault with army license plates. In the car was an army officer and his family, Caspi said on Israel army radio.

An army statement initially said the wife of an army major was killed, but later reports said the victim was his sister-in-law. Israel radio identified her as Sigal Alon, 21.

Authorities said Katanani attempted to ram an oncoming car, but missed. The bus then slammed into an Israeli passenger car, hitting it in the side.

''The bus driver got off the bus, shouted 'Allahu Akbar.' He had an iron bar in his hand. The (Israeli) driver ran toward Erez to call for help, and heard shots. What we understand is that reserve soldiers ... shot the assailant,'' Caspi said.

Army radio reported earlier that an Israeli motorist fatally shot Katanani.

Avi Pazner, a top aide to Prime Minister Yitzhak Shamir, noted the incident followed a U.N. Security Council vote earlier today condemning the killings of six Palestinian civilians by Israeli security forces over the weekend.

''I want to note especially that this incident comes in the wake of another resolution of the Security Council condemning Israel, and that this resolution only encouraged violence and terrorism,'' Pazner said.

Also today, assailants shot and killed Ayshe Ali Sheikh Eid, 20, of Gaza's Rafah refugee camp and wounded her relative, 18-year-old Talaat Awad Sheikh Eid, Palestinian reports said.

The two were suspected of being Israeli informers, the reports said. The army said the woman's death was being investigated by police.

The slaying brought to 325 the number of Palestinians slain by fellow Arabs during the uprising, most on suspicion of helping Israel. In addition, 792 Palestinians have been killed by Israeli soldiers and civilians. Fifty-seven Israelis have also died in the violence.

In the West Bank village of Quibiyah near Ramallah, troops demolished the house of Nidal Jaidan, a suspect in the October stabbing of a Jerusalem policeman.

The United States and other Western nations have sharply criticized house demolitions and sealings, saying they violate international human rights conventions. In most cases, the army takes the action as a method of punishment before a suspect has been tried.