ISTANBUL - Israeli leaders warn Palestinian militants in Hamas-ruled Gaza to stop firing rockets into Israel. Warnings are the clearest indication yet that Israel may launch a Gaza offensive, which could result in heavy casualties and fuel a crisis

Israeli leaders issued yesterday stern warnings to the Gaza Strip’s Islamist rulers Hamas after a sharp escalation of violence in the Palestinian territory dashed hopes of a new truce.

While the Israeli military wrapped up preparations for a possible large-scale assault on the coastal territory, the Israeli foreign minister, who was on a visit to Cairo, has indicated that an Israeli military operation in Gaza might be close at hand.

Israeli premier also issued a "last-minute" appeal to Palestinians in the Gaza Strip to reject their Hamas rulers and threatened them he won't hesitate to use force, while defense minister warned yesterday that militants in Hamas-ruled Gaza would pay a "heavy price" if they continued to target Israel.

On Wednesday, Palestinian militants pummeled southern Israel from Gaza with more than 80 rockets and mortars, causing no injuries but generating widespread panic.

Cabinet ministers approved a broad invasion of Gaza, defense officials told The Associated Press.

"Enough is enough. The situation is going to change," Israeli Foreign Minister Tzipi Livni said in Cairo after meeting Egyptian President Hosni Mubarak to discuss the deteriorating situation in the Gaza Strip since a truce expired six days ago.

"Unfortunately there is one address to the situation of the people in the Gaza Strip, this is Hamas, Hamas controls them, Hamas decided to target Israel, this is something that has to be stopped and this is what we're going to do," Agence France-Presse news agency quoted Livni as saying.

"Yesterday's [Wednesday] escalation was unbearable," Livni said after Gaza militants hit Israel with their biggest rocket barrage in six months to avenge the killing of three fighters from the Islamist movement.

"Hamas needs to understand that our aspiration for peace does not mean that Israel will take this situation any longer," Livni said at a press conference with Egyptian Foreign Minister Ahmed Abul Gheit.

Cairo’s call
Livni has been heading the Israeli negotiating team in peace talks with the Palestinians that resumed in November last year but have failed to make any visible headway since.

Abul Gheit, whose government mediated the six-month truce that expired on Friday, called for restraint in the impoverished territory that has been ruled by Hamas since it routed the rival Fatah movement in June 2007.

"Egypt has made clear that there should be restraint and no escalation and an alleviation of the humanitarian situation," he said, saying Israel should refrain from "collective punishment."

Egypt’s foreing minister said his country would continue its mediation efforts, but expressed pessimism that a new truce could be achieved.

In Jerusalem, Israeli Prime Minister Ehud Olmert yesterday issued a "last-minute" appeal to Palestinians in the Gaza Strip to reject their Hamas rulers and stop rocket fire at Israel, warning them he won't hesitate to use force.

"I didn't come here to declare war," Olmert told Al Arabiya television, an Arab broadcaster which is widely watched in Gaza.

"But Hamas must be stopped -- that is the way it is going to be. I will not hesitate to use Israel's might to strike Hamas and (Islamic) Jihad. How? I will not go into details now," Reuters quoted Olmert’s statement as saying.

Olmert has resisted growing calls within Israel for a major military operation against Hamas, but rocket and mortar fire from the coastal enclave since a six-month-old truce brokered by Egypt expired last week has increased pressure on him to act.

Defense Minister Ehud Barak, meanwhile, warned that militants in Hamas-ruled Gaza would pay a "heavy price" if they continued to target Israel.

"We will not accept this situation," Barak warned yesterday. "Whoever harms the citizens and soldiers of Israel will pay a heavy price."