Israel threatens to step up deadly Gaza offensive

"Our policy is clear -- we will deploy all our efforts to prevent these firings and this contraband," senior defence ministry official Amos Gilad told army radio.

This will include "ground and air attacks on terrorists and their infrastructure," he added.

Israel says that militants in Gaza are amassing stockpiles of arms smuggled into the impoverished territory through tunnels from neighbouring Egypt.

"Hamas, which is reinforcing itself, constitutes a threat to Israel's security," Gilad said, referring to the Islamic militant movement which dominates the Palestinian government.

"Our priority is now to make it more and more difficult for the continuation of terrorism."

Defence Minister Amir Peretz already approved a first intensification of Israel's three-month-plus offensive in Gaza on Thursday after rocket fire from the territory hit his southern hometown of Sderot, wounding three people.

At least 22 Palestinians have since been killed and scores more wounded, as Israel pushed tanks and troops, backed by helicopters and drones, into more populated areas of the Gaza Strip.

In the most recent clashes, several dozen Israeli armoured vehicles and bulldozers, rolled two kilometres (more than a mile) into the northern Gaza town of Beit Hanun Saturday evening, closing off its southern entrance.

But Peretz said Israel needed to take further action to prevent Hamas stockpiling weapons as Shiite militant group Hezbollah did in Lebanon ahead of this summer's 34-day conflict.

"We've learned the lessons of Lebanon well," Israel's top-selling daily Yediot Aharonot quoted him as telling a closed-door meeting.

"We will operate against the armament immediately and we will not allow the terrorist organizations to become stronger. Israel is acting to prevent Hamas from joining the Iranian axis of evil."