The father of a Palestinian toddler killed when Jewish extremists firebombed their West Bank home died of his injuries Saturday, sparking Hamas calls for an "open confrontation" with Israel.
The arson attack in the village of Duma led to angry Palestinian protests and an international outcry over Israel's failure to curb violence by hardline Jewish settlers.
Saad Dawabsha died in hospital in the southern Israeli city of Beersheba where he was being treated for third degree burns for the past eight days, Palestinian official Ghassan Daghlas said.
Dawabsha's wife Riham and four-year-old son Ahmed are still fighting for their lives in another Israeli hospital after the July 31 arson attack which killed 18-month-old Ali.
Israeli media reported signs of improvement in Ahmed's condition, although his life remained in danger.
They said doctors at the Tel Hashomer hospital near Tel Aviv on Friday removed the respirator to which he had been attached and that he opened his eyes, recognising those around him.
Israeli hospital's spokespersons could be reached for comment on Saturday, the Jewish sabbath.
The family's small brick and cement home in Duma was gutted by the fire and a Jewish Star of David spray-painted on a wall along with the words "revenge" and "long live the Messiah".
"Nothing will stop these murderous settler attacks and... we cannot wait until they come into our villages and our homes," Hossam Badran, spokesman of the Palestinian Islamic movement Hamas, wrote on Facebook from his base in Qatar on Saturday.
"Our people in the West Bank have only one choice: that of open and comprehensive confrontation against the occupation."
- Thousands at funeral -
Israeli public radio reported that the army was on alert for possible unrest in the occupied territory and for "Palestinian revenge attacks."
The United Nations has called for restraint.
"Political, community and religious leaders on all sides should work together and not allow extremists to escalate the situation and take control of the political agenda," wrote UN peace coordinator Nickolay Mladenov.
"I reiterate the secretary general's call for the perpetrators of this heinous terrorist act, which was universally condemned, to be brought swiftly to justice," he added.
Israeli Prime Minister Benjamin Netanyahu has condemned the attack as "terrorism in every respect", and vowed to spare no effort in catching those responsible.
He ordered a crackdown on Jewish extremism that has seen three suspects detained.
But as father Saad Dawabsha was buried in Duma on Saturday afternoon, a family friend charged Israeli authorities were complicit in such violence.
"It's a crime committed by the settlers but with the agreement of the occupation," Anwar Dawabsha told AFP.
"It isn't possible that Israel with all its army and its intelligence services still has no information on this attack," he said.
Several thousand mourners turned out to lay Saad Dawabsha to rest, many carrying Palestinian flags, others with portraits of little Ali and the rest of the family.
- International Criminal Court -
Earlier a post mortem was performed on the body at An-Najah University Hospital in the nearby city of Nablus.
A Palestinian official told AFP the pathologist's report would be submitted in evidence to back up a complaint to the International Criminal Court (ICC) in The Hague.
The Palestinians on Monday submitted a request to the ICC to probe the firebombing and "settler terrorism".
At a meeting with Palestinian president Mahmud Abbas on Wednesday, Arab foreign ministers agreed to call on the UN to protect the Palestinians from "terrorist crimes" by Jewish settlers.
Israel this week used a controversial form of detention without trial normally invoked for Palestinians against an alleged Jewish extremist, following the outcry over the firebombing.