Travel permits for Palestinians revoked and hometown of suspects raided as Netanyahu pledges "intensive" police action.
Tel Aviv attack: The Facts
Israel has clamped down on Palestinian movements and boosted security after two suspects killed four people at a popular Tel Aviv nightspot.
Surveillance video, seemingly from the moment of the attack on Wednesday, showed the two men dressed in black suits and ties, calmly walking into a cafe before pulling out guns and opening fire on its terrace.
Most patrons fled in panic, though some fought back at the cafe at Sarona Market in Israel's commercial capital.
At one point, one of the attackers threw a handgun to the ground in frustration as two of the victims lay motionless on the terrace.
The market and complex of bars and restaurants is located across the street from Israel's defence ministry and main army headquarters.
Five people were wounded in addition to the four killed. The suspects were reportedly Palestinian and disguised as Orthodox Jews.
With the attack causing shock among Israelis, officials said on Thursday that they were suspending entry permits for 83,000 Palestinians during the holy Muslim month of Ramadan.
Those killed were all Israelis, identified as Ido Ben Aryeh, 42, Ilana Nave, 39, Michael Feige, 58, and Mila Mishayev, 32, police said.
One of the attackers was arrested, while the other was wounded by gunfire and had undergone surgery, police added.
They were identified as Khaled Mohammad Makhamrah, 22, and his cousin Mohamad Ahmad Makhamrah, 21, both from the Hebron area in the occupied West Bank.
COGAT, the Israeli defence ministry unit which manages civilian affairs in the occupied West Bank, also froze permits for 204 relatives of one of the alleged attackers.
Israel's army locked down the Palestinian town of Yatta, where the attackers were from, with soldiers patrolling and stopping cars as they entered and exited.
Benjamin Netanyahu, Israeli prime minister, visited the scene of what he called the "cold-blooded terrorist murder" after returning from a trip to Moscow and conferred with senior colleagues, including Avigdor Lieberman, the newly installed defence minister.
"We discussed a range of offensive and defensive steps which we shall take in order to act against this phenomenon," Netanyahu's office quoted the premier as saying.
"There will be intensive action by the police, the army and other security services, not just to catch every accomplice to this murder but also to prevent further incidents."
The shooting will serve as a first major test for Lieberman, sworn in on May 30 and who has in the past threatened severe action against Palestinian "terrorists".
A spokesman for Hamas, the Palestinian group that governs the Gaza Strip and which is also present in the West Bank, called the attack a "heroic operation".
It is not yet clear if the attackers were acting alone or as part of a larger plot.
Violence since October has killed at least 207 Palestinians, 32 Israelis, two Americans, an Eritrean and a Sudanese.
Most of the Palestinians killed were carrying out knife, gun or car-ramming attacks, according to Israeli authorities.
Others were killed in clashes or by Israeli air strikes in the Gaza Strip.
The violence has steadily declined in recent weeks, although attacks have continued to occur.
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