Israeli prime minister Benjamin Netanyahu warned Hamas tonight that it will "pay an intolerable price" if it continues to fire rockets at Israel.
Mr Netanyahu also hinted that Israel would reassess its operations in the Gaza war once troops have demolished Hamas tunnels under the Gaza-Israel border.
He said in televised remarks that Israel prefers a diplomatic solution to the recurring conflict with Gaza's Hamas rulers but will keep all military options open to restore security for Israeli civilians.
The Israeli leader spoke after 26 days of Israel-Hamas fighting that Palestinian health officials say has killed at least 1,650 Palestinians, most of them civilians, along with 66 Israelis, all but three of them soldiers.
Hamas has struck a defiant tone throughout the conflict, saying it will not halt fire unless it secures guarantees that Israel and Egypt will lift a seven-year-old border blockade of Gaza.
"We will continue to resist until we achieve our goals," Hamas spokesman Fawzi Barhoum said after Mr Netanyahu's speech, dismissing the Israeli leader's remarks as "confused".
Earlier today, a Cabinet minister said that Israel would not be sending a delegation to Egypt-hosted indirect truce negotiations with Hamas for the time being.
The minister, Yuval Steinitz, alleged that Hamas had repeatedly violated ceasefire deals and that "this leads us to the conclusion that with this organisation there is no point speaking" about any deal.
An Israeli official told the Associated Press that troops will remain in Gaza to wrap up the demolition of Hamas tunnels under the Gaza-Israel border, but that this is a matter of "not much more time".
Israeli media reported that 31 tunnels have already been demolished and that the mission was close to being complete.
Mr Netanyahu said that "Hamas needs to understand that it will pay an intolerable price" for continuing to fire rockets, but indicated the military will enter a new phase of the operation after the tunnels are demolished.
"After completing the operation against the tunnels, the military will prepare for our continuing action according to our security needs and only according to our security needs, until we obtain the objective of returning security to you the citizens of Israel," Mr Netanyahu said.