A Palestinian security officer who saw the boy, Mujahed Al Samadi, struck by a bullet - one of three residents said had been fired at him - said last night that he had been on his own 300 metres from a house on higher ground which was occupied by troops when he was shot.

Local residents said that the boy was harmless and well known throughout the town, and had been shot after other teenagers in the vicinity of the occupied house started to throw stones at the troops who had been searching for Islamic Jihad militants operating in the area.

The residents of the town said stones were thrown at troops looking for Yassin Aburob, an Islamic militant who had taken over the next door house of Mousa Aburob - one of seven occupied in three districts of the town - since the night before and confined his family to one room.

Palestinian witnesses denied an army report that gunfire had been exchanged with Palestinian militants before the incident and insisted the shooting had all been from soldiers. One witness who saw the body after the shooting said the boy had been shot three times, twice in the chest and once in the abdomen.

Mohammed Aburob, 36, a Preventative Security officer, was in his own house - about 300 metres down a hill from the one where troops from the elite Maglan unit had been conducting the operation. He said: "Mujaheb was on his own and was no danger to anyone. I saw him hit by a bullet from a distance. He was covered with blood. I don't think anyone could have confused the gun for a real one.

"Everyone in the town knew he carried this thing-even the army did. Snipers usually have binoculars.

"I think the troops may have been confused because they had been discovered after they had been hiding in the house and kids were throwing stones at them"

The boy's mourning family last night produced the toy gun which was about 60 centimetres long with the barrel and shoulder butt wrapped in black tape, apparently holding them together. The imitation cartridge case was decorated with home sprayed green and blue aerosol stripes. Witnesses said Mujahed had habitually carried the toy gun round with him and that it had been hanging from his neck yesterday.

The boy's father, Amin, a vegetable seller living in one of the poorest parts of the town said his son, the second of four children, had dropped out of school four years ago. The father produced a Palestinian health ministry document saying Mujahed had been unable to finish his studies, was unfit for work and described him - in English - as suffering from "mild mental retardation".

Amin Al Samadi said the boy had left home at around 7am. "I had a room for him with a television and I didn't like him going out but I couldn't keep him in all the time.

"I want to sue the Israeli government because he was retarded and he shouldn't have been killed."

One of the dead boy's cousins, 32-year-old Ibrahim Alsamadi, cited as evidence that even troops were familiar with the gun the fact that an army bus had left him unmolested outside a mosque after spotting him playing with the same toy gun.

Mr Aburob said it had taken about 15 minutes for a neighbour's car to take him to hospital after an ambulance had been unable to get to the incident but that Mujahed had died at the scene.