Israel pounded Hamas targets in the Gaza Strip from the air on Sunday and prepared for a possible invasion after killing at least 296 Palestinians in two days of attacks, Reuters reported.
Israel said the campaign that began on Saturday was a response to almost daily rocket and mortar fire that intensified after Hamas, the Islamist group in charge of the enclave that Israel quit in 2005, ended a six-month ceasefire a week ago.
During the first two days of the assault, militants fired some 80 rockets at Israel, emergency services said, less than some analysts had expected. Two rockets struck near the port of Ashdod, 30 km (18 miles) from Gaza, causing no casualties.
Israeli tanks deployed on the edge of the Gaza Strip, poised to enter the densely populated enclave of 1.5 million Palestinians. Prime Minister Ehud Olmert's cabinet approved a call-up of 6,500 reservists, a government official said.
Foreign Minister Tzipi Livni, who hopes to become prime minister after a Feb. 10 election, appeared to rule out a large-scale invasion to restore Israeli control of the blockaded territory, once dotted with Jewish settlements.
"Our goal is not to reoccupy Gaza Strip," she said on NBC's "Meet the Press" programme. Asked on Fox News if Israel was out to topple Gaza's Hamas rulers, Livni replied: "Not now."
Mark Regev, a spokesman for Olmert, said Israel would press on with the campaign "until we have a new security environment in the south, when the population there will no longer live in terror and in fear of constant rocket barrages".
Asked how long the operation would last, Israel's military spokesman, Avi Benayahu told an Israeli television channel it could "still take many days."
Hamas spokesman Fawzi Barhoum urged Palestinian groups to use "all available means, including martyrdom operations" -- a reference to suicide bombings in Israel.
Keeping pressure on Hamas after bombing runs that turned Saturday into one of the bloodiest days for Palestinians in 60 years of conflict, Israeli aircraft flattened the group's main security compound in Gaza, killing at least four security men.
Israel expanded its air campaign to the southern Gaza Strip, bombing some 40 smuggling tunnels running under the border with Egypt, a network that is a lifeline to the outside world.
Dozens of Gazans crossed into Egypt through holes opened in the border wall by bulldozers and explosives. Palestinian gunmen exchanged fire with Egyptian police who arrested dozens trying to stop the influx, witnesses said. Egyptian state television said Hamas forces shot dead an Egyptian border officer.
Israeli bombs destroyed Hamas's southern headquarters and medical officials said several people were wounded. Air strikes after dark killed two people in a car and caused four injuries near the home of Hamas leader Ismail Haniyeh.