Israel arrested dozens of Hamas cabinet ministers public representatives today in a move the Islamic group said aimed to topple its government.
As the Israeli army pressed on with a Gaza offensive to free an abducted soldier, Group of Eight foreign ministers said in a joint statement the arrests in the occupied West Bank raised "particular concerns" adn urged restraint.
Palestinian President Mahmoud Abbas asked the United Nations to intervene to secure the immediate release of the Hamas officials arrested by Israel.
Alvaro de Soto, the UN special envoy for the Middle East peace process
Hundreds of Palestinian gunmen wielding automatic rifles and anti-tank weapons took up positions as Israeli forces prepared to open a second front in the northern Gaza Strip, a day after tanks and infantry pushed into the south of the territory.
"We will confront the occupation by all means, even if it costs us our necks," senior Islamic Jihad leader Khaled al-Batsh told reporters in Gaza.
The Popular Resistance Committees (PRC), one of the militant groups believed to be responsible for the abduction of Corporal Gilad Shalit, issued a statement taunting Israel, saying they would not indicate whether the soldier was alive.
Israeli Defence Minister Amir Peretz said Israel would step up pressure against militants in Gaza to secure the release of the soldier and stop rocket fire from the area.
"The army is ready for a severe and extensive operation against the terror organisations in Gaza," he said.
"If the soldier is returned and [rocket fire]is halted unconditionally, our troops will pull back."
In a night-time blitz in the West Bank, troops arrested Finance Minister Omar Abdel-Razeq and seven other cabinet members - a third of the Hamas cabinet - along with 23 legislators.
"[This]... is a pre-planned plot to destroy the Authority, the government and the parliament and to bring the Palestinian people to their knees," Hamas lawmaker Mushir al-Masri said.
Israel said 64 Hamas officials were detained and it vowed to seize other members of the militant group, whose charter calls for the Jewish state's destruction.
Israeli officials said those arrested would be prosecuted for involvement in "terror" acts.
"The masquerade ball is over," Mr Peretz said. "The suits and ties will not serve as cover to the involvement and support of kidnappings and terror."
Adding to the tensions, the body of an 18-year-old Jewish settler, Eliyahu Asheri, was found near the West Bank town Ramallah. The PRC took responsibility for the killing.
Preparing for a northern Gaza offensive, Israeli aircraft dropped leaflets urging residents to avoid areas troops may target. Troops fired dozens of artillery shells in both south and northern Gaza, wounding two policemen.
Earlier missile strikes this week have knocked out bridges, power and water supplies in Gaza, home to 1.4 million people.
This evening, parts of southern Gaza were plunged this evening when a rocket apparently fired by Palestinian militants went off course and hit a power sub-station.