A Palestinian who drove a bulldozer into traffic on one of Jerusalem's busiest streets was yesterday shot dead after killing three Israelis and wounding more than 40.

The attack  -  the first in Jewish West Jerusalem for nearly four months  -  caused havoc to the city centre, leaving a trail of mangled vehicles in its wake. 

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'Liquidated': An armed man clings to the bulldozer after shooting dead the terrorist

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The off-duty soldier, his gun clearly visible, climbs higher on the cab as the driver can be seen slumped over through the windshield

Witnesses say the driver used the 20-ton vehicle to ram repeatedly a bus packed with passengers before striking another and crushing several cars on Jaffa Street. 

A police officer managed to shoot the man after a brief struggle.

Last night, police named the attacker as 30-year- old Hosam Dwayyat, a construction worker from Arab East Jerusalem. Israeli police chief Dudi Cohen said there had been no immediate claim of responsibility from militant groups and that Dwayyat appeared to have acted alone.

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A stunned rescue worker carries a baby from the overturned bus rammed by the bulldozer

The Israeli government immediately denounced the attack as 'an act of senseless, murderous violence', while an aide to Palestinian president Mahmoud Abbas claimed it was an attempt to wreck peace negotiations.

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A second view of the same vehicles shows the extent of the damage caused

However, both Hamas and Islamic Jihad called the attack a 'natural' response by Palestinians to Israeli aggression.

Neither Islamist group claimed responsibility.

Police confirmed last night that two Israeli women and a man died in the attack. 

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A baby is carried to safety after the Bulldozer driver was shot dead after going on rampage

There were also claims on Israeli TV that one unnamed woman had saved her baby daughter's life by throwing her out of a car window seconds before the bulldozer hit.

The baby escaped unharmed although the mother was injured.

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Panic: Israelis run towards a bus that was overturned after it was rammed by a man driving the bulldozer in the background

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Israelis look down on the overturned bus on Jaffa Road in the aftermath of the attack

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Injured Israelis are helped from the bus after it was rammed and overturned by the bulldozer

The violence, the first major attack in Jerusalem since March, wreaked havoc and left a large swath of damage in the heart of downtown Jerusalem.

Traffic was halted, and hundreds of people fled through the streets in panic as medics treated the wounded.

The attack took place in front of a building housing the offices of The Associated Press and other media outlets.

BBC footage captured the huge frontloader crushing a vehicle and the off-duty soldier shooting the perpetrator in the head several times at point-blank range as onlookers screamed.

The attack occurred in an area where Jerusalem is building a new train system. The project has turned many parts of the city into a big construction zone.

The attack represented a chilling departure from militants' previous methods, which were mostly suicide bombings and shootings.

During the second Palestinian uprising, which erupted in late 2000, Jerusalem experienced dozens of suicide bombings and other attacks.

The city has been largely quiet in the past three years, though sporadic attacks have persisted. In March, a Palestinian gunman entered a Jerusalem seminary and killed eight young students.

Despite the Palestinian claims of responsibility, Israeli police chief Dudi Cohen said the attacker appeared to be acting alone.

'It looks as if it was a spontaneous act,' he said.

Abbas aide Saeb Erekat condemned the violence.

'We condemn any attacks that target civilians, whether Israelis or Palestinians, and President Abbas has been consistent in his position to condemn any attacks, including the one in west Jerusalem, that target civilians,' he said. Enlarge 

This car was reduced to a pile of mangled metal after the frontloader, in the background, ground it to pieces

Major Israeli retaliation seems unlikely given the police chief's claim that the attacker acted alone and the Jewish state's desire to maintain the Gaza ceasefire and to support Abbas' security forces in the West Bank.

In contrast to West Bank Palestinians, Arab residents of Jerusalem have full freedom to work and travel throughout Israel. Many Jerusalem Arabs work in the construction industry.

About two-thirds of Jerusalem's 700,000 residents are Jews, and the rest are Palestinians who came under Israeli control when Israel captured their part of the city in 1967.

Cassia Pereira, office manager for AP's Jerusalem bureau, watched the attack unfold outside her window.

'I saw him but it was too late and there was nothing to do,' she said, with tears in her eyes. 'I was in panic. I couldn't say a word ... I realized something was not normal, something was wrong.'