The Associated Press

TEL AVIV, Israel € In a scene growing horribly familiar, an accelerating terror campaign turned a day of lighthearted Jewish celebration into a nightmare of blood and smoke when a suicide bomber struck yesterday in the heart of Tel Aviv, killing at least 14 people.

The victims included children in costume and makeup for the holiday of Purim. At least 130 people were wounded in the attack, which left a jumble of shattered bodies and wrecked cars and paralyzed the peace effort.

A mounting toll of dead and wounded, the repeated scenes of carnage and the heart-wrenching despair of victims' families, fueled a deep upwelling of anger among Israelis. It was the fourth suicide bomb attack in nine days € the deadliest stretch of terror in Israel's history.

The death toll might have been much higher if the bomber, who was on foot, had managed to enter a crowded shopping center, authorities said. Israel radio said at least 14 people were killed, including the bomber.

The Israeli government decided in an emergency session to form a special anti-terrorism task force with sweeping powers. Prime Minister Shimon Peres suggested that Israel now reserved the right to strike anywhere, including PLO-ruled areas.

The task force would be ''able to act in every place to strike against and punish'' the suicide bombers, Peres said. ''We will reach every corner where this terror is rooted.''

Strikes in PLO-ruled areas would violate the Israel-PLO accords and badly discredit Palestinian leader Yasser Arafat among his people.

A furious, wildly militant mood swept over Tel Aviv, a city known for its generally moderate populace that supports peacemaking with Palestinians and Arabs.

While government ministers met at the heavily-guarded Defense Ministry complex a mile from the bombing site, crowds outside lit bonfires and shouted ''We want war!'' and ''We want revenge!''

Others shouted ''Death to Arabs!'' and one man held a sign calling for a ''final solution'' against them € paraphrasing the Nazi term for the World War II slaughter of millions of Jews.

In a call to Israel Radio, the Muslim militant group Hamas claimed responsibility for yesterday's bombing. Hamas has also claimed the previous three bombings, which killed 44 victims and three suicide bombers.

Faced with the possible collapse of his three-year peace gamble, Arafat said he was ready to cooperate fully with Israel in going after Palestinian militants. But he added that he hoped Israel would not act hastily and break off peace talks.

''I hope that we will not reward these terrorists,'' Arafat told reporters in Gaza City.

Later Monday, Palestinian security forces announced the arrest of the man they called the ''mastermind'' of three of the last four suicide bombings in Israel: Mohammed Abu Wardeh, 28, of the West Bank town of Ramallah.

Brig. Zakariya Baloushi, deputy chief of Palestinian intelligence, said Abu Wardeh apparently received instructions from abroad, and Israel TV said his handlers were based in Damascus. It was not clear whether Abu Wardeh would be handed over to Israel or face prosecution by Palestinian authorities.

Peres also said Israel planned to make more arrests overnight and would delay Israel's planned pullout from Hebron until the PLO removes calls for Israel's destruction from its charter. Late Monday, the army also ordered a closure on all Palestinian towns and villages in the West Bank and forbade Israelis from employing Palestinians.

Monday's blast went off just after 4 p.m. outside the Dizengoff Center, the largest shopping center in the Mediterranean metropolis that is the financial and cultural center of Israel.

Before setting off the bomb, the bomber had tried to enter the shopping center but appeared to draw the suspicions of policemen stationed at the entrance, according to witnesses. He then turned toward a crowd of 20 people around a row of cash machines and detonated the explosive device strapped to his body.

''I suddenly heard an absolutely tremendous explosion, and then a cloud of smoke filled the whole intersection,'' said a woman in her 30s, who gave her name as Michal. ''I saw bodies everywhere, pieces of bodies.''

Eli Shurany, 39, said he saw a woman and a young girl, about 10 years old, who were killed instantly. ''There was one girl with the bottom of her leg blown off, her bone sticking out,'' Shurany said.

An empty baby carriage stood only yards from where the bomb had gone off. A mother pulled her sobbing daughter away, tears streaking the Purim makeup on the girl's face.

Ichilov Hospital said it treated four children wounded by the bomb.

Many Purim celebrations had been canceled anyway, due to Sunday's bus bombing in Jerusalem. The holiday celebrates the deliverance of the Jews of ancient Persia from a plot to slaughter them.

Monday's bombing came four months to the day after Prime Minister Yitzhak Rabin's assassination by a Jewish right-wing extremist, which plunged Israel into gloom but also infused the peace process with unprecedented public support.

That has been turned on its head by the four bombings.

With three months to go until the May 29 elections, Peres' lead in the polls has been wiped out. The right-ring opposition, whose leaders seek to salvage what they can of Israel's control over the West Bank and Gaza despite the establishment of Palestinian autonomy, appear headed for victory.

Benjamin Netanyahu, leader of the opposition Likud Party, said the bombings have belied the basic premise of the Peres government ð that giving the Palestinians control of West Bank and Gaza land will lead to more security for both sides.

''Our mistake was in believing that we can hire a subcontractor, Arafat, and he will take care of (security),'' Netanyahu said. ''We must take matters into our own hands.''

Israel's Channel 2 TV said several Cabinet officials supported sending troops into the autonomous Gaza Strip to root out militants.

''This is war. We must deal directly with the Hamas terror machine,'' said Health Minister Ephraim Sneh.