More than 200,000 Palestinians flooded the streets of Gaza City Monday for the funeral procession of Hamas spiritual leader Sheikh Ahmed Yassin, who was assassinated by Israeli troops.

Yassin was killed as he left his Gaza house at daybreak Monday. Helicopter gunships fired missiles at his car as he left for a mosque. Seven others were killed as well.

Yassin was the most prominent Palestinian leader killed by Israel in more than three years of fighting and his assassination drew condemnation from the Arab world and many European countries.

Hamas militants vowed to bring death to every house in Israel and vowed revenge against Israeli Prime Minister Ariel Sharon.

"Sharon has opened the gates of hell and nothing will stop us from cutting off his head," the group said in an announcement broadcast over mosque loudspeakers.

Close to 200,000 mourners jammed the streets of Gaza City for Yassin's funeral procession Monday. They carried black flags of mourning, Palestinian flags and pictures of the wheelchair-bound Hamas founder.

At an emergency session of  his cabinet, Palestinian leader Yasser Arafat declared three days of mourning. The Palestinian Authority condemned the assassination, expressing concern about the potential for further violence.

"Assassinations, incursions, walls, will not produce peace and security. On the contrary, it will just add fuel to the fire,'' said cabinet member Saeb Erekat.

Fearing reprisal, Sharon closed off the West Bank and Gaza Strip and said Israel will press ahead with its war on terror. Sharon said Yassin was an "archterrorist'' who plotted attacks that killed hundreds of Israelis and was "among Israel's greatest enemies.''

"The war against terror has not ended and will continue day after day, everywhere,'' Sharon told members of his Likud party Monday. "This is a difficult struggle that all the countries of the enlightened world must participate in."

Witnesses in Yassin's neighbourhood said helicopters fired three missiles at Yassin and two bodyguards. All that was left at the scene by the time cameras arrived were Yassin's wheelchair and pools of blood.

Yassin, a quadriplegic since childhood, founded Hamas in 1987. The radical Islamic organization has grown in power, and is seen as second only to Yasser Arafat's Fatah. 

In recent years Yassin had no apparent link to the Hamas military wing. Israel held him prisoner for several years, before his release in 1994.

The Israeli cabinet agreed to step up operations against Palestinian militants one week ago, after two Palestinian suicide bombers struck the heavily defended seaport in Ashod. The government had warned that it would be targeting leadership figures.

'No advance warning'

U.S. national security adviser Condoleezza Rice said Israel had not consulted with President George Bush about targeting Yassin, and said Washington had "no advance warning" of the attack.

"Let's remember that Hamas is a terrorist organization and that Sheik Yassin has himself, personally, we believe, been involved in terrorist planning," she said in an interview with NBC.

Foreign Affairs Minister Bill Graham condemned the attack. "The extra-judicial killing of Sheik Yassin is simply unacceptable and contrary to Israel's international obligations," he said in statement.

British Foreign Secretary Jack Straw said international law recognizes Israel's need to defend itself against terrorism, but called the assassination "unacceptable,'' and "very unlikely to achieve its objectives.''

UN Secretary-General Kofi Annan condemned the killing as "contrary to international law."

Egyptian officials cancelled a visit to Israel in protest. They had planned to go to Jerusalem tomorrow to take part in ceremonies marking the 25th anniversary of the signing of the Camp David peace treaty between Egypt and Israel.

Egyptian President Hosni Mubarak told reporters the killing is "regrettable and cowardly.'' Asked about the killing's likely impact on the peace process, Mubarak replied: "What peace process?''

The foreign ministers of the European Union governments appealed to Israel and Palestinians to "refrain from acts of violence which will only lead to more deaths and will put a peaceful settlement (of their conflict) still further from reach.''

They said in a statement that Israel has the right to protect itself against terrorist attacks, but it "is not, however, entitled to carry out extra-judicial killings."

In other developments:

• Hezbollah guerrillas shelled Israeli positions in a disputed border area near Lebanon for the first time in five months, triggering an Israeli airstrike and artillery fire, Lebanese security officials said. There were no reports of injuries.
• Three Palestinians were killed in Gaza in clashes with Israeli troops, and one was killed while handling explosives.