ISRAELI Prime Minister Benjamin Netanyahu threatened “aggressive steps” yesterday in response to the new Palestinian uprising.

He told MPs: “We will use and not hesitate to use all means at our disposal to restore calm.”

“I’m sure the steps we will take will let the other side know that terror doesn’t pay.”

His comments came after two Palestinians, armed with a gun and a knife, killed two Israelis on a Jerusalem bus. One of the pair was killed by police.

Elsewhere in Jerusalem, a Palestinian rammed his car into a crowded bus stop, then got out and began stabbing people. The attacker and an Israeli were killed.

Police said an Israeli man stabbed one of his compatriots, mistaking him for a Palestinian in an apparent botched revenge attack.

Soldiers used “riot dispersal means” against protesters at an army checkpoint on the edge of the Gaza Strip, wounding five, two seriously.