Palestinian Prime Minister Ismail Haniyeh told Israel today to halt its Gaza offensive if it wanted to free a captured soldier and said his Hamas-led government would not give way under force.
Israeli warplanes pounded Gaza, setting ablaze the Interior Ministry offices, on the third day of an offensive aimed at bringing home the army corporal who was seized in a cross-border raid last Sunday.
The Israeli army has also said it is checking reports that militants from the Palestinian Al-Aqsa Martyrs Brigades have kidnapped an Israeli soldier in the West Bank.
The crisis has sent Israeli-Palestinian relations to new lows and piled more pressure on the Hamas government, straining under a US-led aid embargo to get it to renounce violence and drop its vow to destroy Israel.
Mr Haniyeh, addressing the public for the first time since the abduction of Corporal Gilad Shalit, said at Muslim prayers in Gaza's main mosque that he was working with Egyptian mediators and Palestinian President Mahmoud Abbas to end the crisis.
"The aggression must stop in order not to make the situation more complicated," Mr Haniyeh said, vowing that his government would not collapse even if its members were detained or killed.
"No concessions will be made," he said. Hamas ministers have been keeping under cover after Israeli threats of assassination. Hamas's armed wing was among the groups that grabbed Cpl Shalit, although the government said it had no knowledge of the raid.
Voicing hope for mediation, Egyptian President Hosni Mubarak said in a newspaper interview that Hamas had given "conditional approval" for the release of Cpl Shalit, without setting out what the conditions were.
Overnight, Israeli planes struck over 20 targets in the Gaza Strip. They included the office of the Hamas interior minister; a building used by Al-Aqsa Brigades militants, part of Abbas's Fatah movement; roads; and zones used for firing rockets.
An Islamic Jihad militant was killed, the first death of the offensive, in what the army said was a strike on a rocket squad.
Israel held off a threatened ground attack into northern Gaza to give Egyptian diplomacy time, but there was no suggestion the Jewish state would agree to any conditions.
Meanwhile, the Israelis intend to open a Gaza border crossing next week to ensure food and fuel supplies reached Palestinians.
The Karni crossing, along with other entry and exit points, has been closed since Sunday and humanitarian agencies have warned that supplies are running short in Gaza.