Interim Israeli Prime Minister Ehud Olmert accused the Islamist Hamas movement on Sunday of "shattering" the Gaza truce after two rockets hit Israel, prompting an air strike which killed four Palestinian militants, AFP reported.
Olmert told the weekly cabinet meeting that Israel could not stand idly by while it came under repeated rocket fire and said he had ordered security chiefs to draw up action plans against Hamas's 17-month-old rule in Gaza.
But several more rockets fired from Gaza hit Israel late on Sunday afternoon, leaving one person with light shrapnel wounds to the head and the arm, the army said.
Olmert's comments came as defence officials said that Israel's border crossings would remain closed to humanitarian deliveries to the aid-dependent territory, despite mounting international pressure for a resumption of desperately needed food and fuel.
"The responsibility for the shattering of the calm and the creation of a situation of prolonged and repeated violence in the south of the country is entirely on Hamas and the other terror groups in Gaza," Olmert told ministers.
He said he had asked security chiefs to draw up options for action against Hamas rule.
"I instructed them to... present different action plans against the Hamas terror rule without its hampering our ability to use all necessary force in our response to violations of the calm."
But the head of the Hamas administration in Gaza, Ismail Haniya, said that it was Israel that was violating the truce, not the Islamists. He demanded that Israel prove its interest by keeping to its side of the bargain.
"Israel must turn its words about a truce into actions by halting the aggression and lifting the unjust siege," Haniya said.
He was dismissive of calls by some Israeli leaders for a resumption of so-called "targeted killings" against Hamas leaders.
"Such threats don't even scare the smallest Palestinian child."
During Sunday's cabinet meeting, a senior official quoted Transport Minister Shaul Mofaz, a former defence minister, as saying: "We must stop talking and start a policy of targeted killing against the Hamas leadership."
Haniya made his comments at the funeral of four Palestinian militants from the Popular Resistance Committees, a small armed group not linked to Hamas, who were killed in an Israeli air raid on Gaza City earlier on Sunday.
The army said that the four were preparing to fire rockets at Israel, and that the raid followed two hits which caused neither casualties nor damage.
Olmert's speech to the cabinet exposed a mounting rift with Defence Minister Ehud Barak over the Egyptian-brokered truce with Hamas which went into force on June 19 and which, despite sporadic violations by both sides, had led to a prolonged calm on the border until earlier this month.
Barak took a far more conciliatory line than his colleagues, saying Israel should be prepared to consider a return to the deal.
"If the other side wants the calm, we will consider it seriously," he said.
Any major change of policy will have to be approved by Israel's security cabinet which is expected to meet later this week.
Since violence flared on November 5, Israeli forces and militants, some of them from Hamas, have engaged in almost daily tit-for-tat exchanges and Israel's border with Gaza -- its sole gateway for vital goods -- has remained almost continuously closed.
On Sunday, Israel maintained the crippling blockade which has forced the United Nations to suspend food distribution to 750,000 Gaza residents and the territory's sole power plant to shut down.
"The crossings will remain closed until further orders," said Israel's liaison officer for the Palestinian territories, Peter Lerner.
Top Barak aide Amos Gilad, who negotiated the informal truce with the Egyptians, said Israel had not ruled out reopening the crossings to limited humanitarian deliveries.
"The decision to reopen the borders could be taken today or tomorrow. Israel does not want a humanitarian crisis," Gilad told army radio.
Palestinian president Mahmud Abbas was expected to press Olmert on the issue in talks on Monday, following appeals from both the European Union and the United Nations.
Israel had been expected to significantly ease its blockade after the truce went into effect in June. It argues that militant attacks have made this impossible, but Hamas accuses it of breaching the deal.