Is the Palestinian "Suicide Bombing" in Israel's cities lawful in Islam?
According to Islam, if the enemy kills civilians from us, then they have declared a war from all directions upon us. We as Muslims must not start killing civilians, because in Islam, we are forbidden to start it: "...if any one slew a person - unless it be for murder or for spreading mischief in the land - it would be as if he slew the whole people: and if any one saved a life, it would be as if he saved the life of the whole people...(Noble Quran 5:32)"
But when we are confronted with an enemy that doesn't care about civilization and human value and worth, then the Noble Quran instructs us: "O ye who believe! the law of equality is prescribed to you in cases of murder: the free for the free, the slave for the slave, the woman for the woman. But if any remission is made by the brother of the slain, then grant any reasonable demand, and compensate him with handsome gratitude, this is a concession and a Mercy from your Lord. After this whoever exceeds the limits shall be in grave penalty. (The Noble Quran, 2:178)"
As to the Palestinian suicide bombers today, the religious leaders of the Islamic organizations inside Palestine made it very clear that they are giving the verdict (fatwa) to kill the civilian Jews inside Israel, because (1) the Jews are killing civilians from us; and (2) the Jews are building more settlements and are not withdrawing from the lands that they were not supposed to be in since 1991.
So my answer would be, may Allah Almighty bless our Muslim brothers and sisters in Palestine and grant the Highest Levels of Paradise to its Suicide Bombers.
www.answering-christianity.com/suicide_bombing.htm