Halutz, officials said, has argued that a static force in the Gaza Strip would result in Israeli casualties, Middle East Newsline reported.

"We can't remain in a stationary position for much longer," a military source said. "We're either inside and fighting or outside the Gaza Strip."

On Monday, several elite battalion units, backed by 50 main battle tanks, armored personnel carriers and bulldozers, penetrated the northern Gaza Strip as part of Operation Summer Rain. The incursion took place three days after Olmert and Peretz blocked an attack on Bet Hanoun, a town in the northern Gaza Strip regarded as the launch pad for Palestinian missile strikes against Israel.

"We have no intention to recapture the Gaza Strip or control the Palestinian population," Peretz said. "We do not want our soldiers running through the alleys of refugee camps between Gaza City and Rafah."

Officials said the military incursion in the northern Gaza Strip would be limited to searching for bombs and tunnels similar to the underground passage used in the June 25 infiltration of an Israeli military base, in which a soldier was abducted. The Israeli advance encountered Palestinian resistance and a Palestinian was killed.

Olmert has been pressed by the United States to exercise restraint in wake of the Hamas abduction of the Israeli soldier. Olmert, Peretz and Foreign Minister Tzipi Livni have been in daily contact with Secretary of State Condoleezza Rice.

"Prime Minister Ehud Olmert spoke this afternoon [Sunday] with U.S. Secretary of State Dr. Condoleezza Rice, who telephoned in order to be updated on the situation in the Gaza Strip," a statement from Olmert's office said. "She said that she was concerned by the deterioration in the humanitarian situation in the Gaza Strip and by the security situation."

Olmert told Ms. Rice that Israel's military has been ordered to avoid harming civilians in the Gaza Strip, the statement said. The prime minister was also quoted as telling the U.S. official that Israel permitted 150 trucks laden with food and medicine to enter the Gaza Strip.

The prime minister, pledging to end the military operation upon release of the Israeli soldier, has issued nearly daily threats against Hamas. Olmert hinted that Israel could assassinate Hamas leaders based in Syria.

"I have given instructions to intensify the strength of action by the army and security services, to hunt down these terrorists, those who send them and those who harbor them," Olmert said. "I have said, and will repeat, nobody will be immune."

On Monday, Hamas set a July 4 deadline for Israeli agreement to release at least 1,000 Palestinians. The abductors did not specify the consequences.

"With each day, Israel has been moving closer and closer to them [abductors]," former Foreign Minister Silvan Shalom, a member of the Knesset Intelligence Agencies subcommittee, said.

On Monday, the London-based daily Al Hayat said an Egyptian security delegation met the Israeli soldier. The newspaper, in a report dismissed by Israel, said the delegation brought a physician to examine the soldier.

Officials said the military was prepared to end the crisis by agreeing to a release of an undetermined number of Palestinian prisoners. They said the military has assessed that a drawn-out confrontation would benefit the Hamas-led PA.

"At this point, there are senior commanders ready to release Palestinians to end this chapter," a military source said. "The army doesn't want to hang around the Gaza Strip and be sitting ducks for Hamas."

Officials said Israel's military has assessed that Hamas and its allies would soon try to abduct additional Israeli soldiers. They said Israeli air strikes — including the bombing of the empty office of Prime Minister Ismail Haniya — have failed to deter Palestinian insurgents.

"The freedom of [Palestinian] prisoners is not on the agenda," Infrastructure Minister Binyamin Ben Eliezer, a member of the security ministerial committee, said. "If we release prisoners, then they will abduct our soldiers every Monday and Thursday."

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