Israel declared the Gaza Strip an "enemy entity" today and said it would reduce its fuel and power supplies to the Hamas-run territory in response to rocket attacks by Palestinian militants.
Hamas described the move, coinciding with a visit to the region by US Secretary of State Condoleezza Rice to promote a US-proposed Middle East peace conference, as a declaration of war.
"They aim to starve our people and force them to bow and accept humiliating formulas that could emerge from the so-called November peace conference," Hamas spokesman Fawzi Barhoum said.
Prime Minister Ehud Olmert's office said his security cabinet approved the "enemy entity" classification and there would be "limitations on imports to the Gaza Strip and a reduction in the supply of fuel and electricity".
It said the sanctions would be implemented after Israeli authorities examined the legal and humanitarian ramifications.
"This allows Israel to order a number of administrative sanctions against the Gaza Strip, of course on condition they don't cross the red line in terms of inflicting humanitarian damage," said public security minister Avi Dichter.
Mr Olmert has been under pressure from right-wing members of his government to order a broad military ground operation in the Gaza Strip to try to curb frequent cross-border rocket salvoes.
The security cabinet, however, opted several weeks ago to explore the possibility of cutting power to the area instead, sanctions that Israeli officials acknowledged could be seen as a violation of international law.
By formally defining the Gaza Strip as an enemy entity, Israel could argue that it cannot be bound by international law governing the administration of occupied territory to supply utilities to the population of 1.5 million. Israel withdrew troops and settlers from the Gaza Strip in 2005.
Palestinians contend it is still under Israeli occupation because Israel controls its borders, air space and coastal waters. Hamas Islamists seized control of the territory in June after routing fighters from President Mahmoud Abbas's Fatah faction.