A Palestinian journalist in the Hebron area said she did not believe the picture was a fake and expressed surprise at the furor it caused in Israel.
"I can find you many, many photos like this," she told DPA. "Many kids imitate adults and wear toy masks and guns, especially during marches. It's not strange at all.
She added that she had seen children as young as the one in the photograph wearing similar costumes.
"In our society it happens a lot. It's a kind of phenomenon," she said, adding blue eyes were also not rare in Hebron.
The army did not release the name of the family or say whether it thought the bomb-belt was real.
"What is obvious is that Palestinians are feeding the hatred of Jews and Israelis to their children at the earliest possible age," said David Baker, an official in the office of Prime Minister Ariel Sharon.
Palestinian officials dismissed it as a propaganda trick.
"This is cheap Israeli propaganda. They are using this photo to justify Israeli crimes against the Palestinian people and to go on with their occupation of the Palestinian territories," Information Minister Yasser Abed Rabbo said.
"These photos can easily be forged and distributed, and this has been done by the Israeli media several times before."
Ordinary Palestinians said if the photograph were genuine it was likely the child had been dressed up for fun and did not mean Palestinians were about to use children in suicide bombings.
Children have been seen dressed up as suicide bombers at school ceremonies and rallies supporting militants spearheading a 21-month-old uprising against Israeli occupation.
Asked whether the army would take reporters to the house to verify the authenticity of the photograph, an army spokeswoman said this was not immediately possible because Hebron was a 'closed military zone' from which journalists were barred.
End of Article - click to reset here.
Labor Minister Ghassan Khatib said the IDF distributed the picture to "tell the world that the Palestinians are teaching their children how to hate Israel and how to act against Israel - and I just want to say this is correct."
