Prime Minister Ehud Olmert today threatened stronger Israeli military action in the Gaza Strip unless Hamas ceased its rocket attacks on southern Israel.
"If the measured steps we are taking, in the political and military sphere, do not bring about the desired calm, we will be forced to intensify our response," Mr Olmert told his cabinet in broadcast remarks.
Israel killed three suspected Hamas militants in a Gaza air strike, building up pressure on the ruling Palestinian group to stop firing the makeshift rockets.
But Israeli political sources said a big Israeli ground operation was unlikely. In the Gaza Strip, the latest Egyptian-brokered ceasefire appeared to be holding after more than a week of fierce internal fighting between Hamas Islamists and President Mahmoud Abbas's secular Fatah faction.
At least 49 Palestinians have been killed in the factional battles, the most deadly in Gaza since Hamas and Fatah formed a unity government in March.
Hamas has accused Israel of carrying out attacks against it in a bid to help Fatah. Israel's bombing campaign against Hamas - Mr Olmert said militants have fired more than 120 rockets from Gaza since Wednesday - has killed at least 21 Palestinians, including, local residents said, some 5 civilians.
Mr Olmert said dozens of Hamas militants have been killed in the Israeli strikes over the past several days. "Hamas people are paying, and will pay, a very heavy personal price for these attacks on the residents of Sderot and nearby communities," he said.
There was no immediate Hamas response to Mr Olmert's comments. The rockets fired at southern Israel have caused injuries but no deaths in the town of Sderot and surrounding area where a total of 40,000 people live.