the man produced a machine gun from his shoulder bag and started firing Richard Oldridge, eye-witness

A taxi driver was blown from his cab by a grenade explosion and pedestrians received gun shot wounds.

Eye-witness Richard Oldridge saw the attack.

"Suddenly a man appeared and ran alongside the coach.

"Somebody closed the coach doors and the man produced a machine gun from his shoulder bag and started firing," he said.

At that point he had dived inside a nearby pub for cover, Mr Oldridge added.

Another witness, hotel guest Johann du Pleiss, described the scene after the shooting stopped.

He said there were three people lying on the pavement, one of whom he assumed to be a terrorist.

"His gun was lying next to him. It seemed he had been killed by a hand grenade or bomb he was carrying," Mr du Pleiss said.

The coach was riddled with bullet holes as were nearby buildings.

A man, said to be of Middle Eastern appearance, was pursued and captured by police immediately after the attack.

He is currently being interviewed by officers.

The Israeli authorities have said Britain must share some of the blame for the incident.

Government spokesman Meir Amit said: "The British police are generally known for their efficiency but recently they have been standing helplessly by."

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