Israel Continues Offensive in Gaza While Truce Talks Provide Optimism

Israel kept up its intense air and ground operations in Gaza today, even as the first signs of progress towards a ceasefire emerged from Egyptian-led negotiations.

Israeli forces were reported to be closing in on the outskirts of Gaza City, forcing thousands more Palestinians to flee their homes.

It is not clear whether this morning's offensive marks another major escalation in the conflict or a brief foray - so far Israel has avoided sending grounds troops into the heart of Gaza City.

A senior Israeli defence ministry official, Amos Gilad, was due in Cairo to assess an Egyptian proposal for an initial 10-day ceasefire. Hamas reportedly agreed in principle to a ceasefire but last night, the Islamist movement submitted its own conditions.

"There is no disagreement with the Egyptian leadership. The issue is differences over how to deal with the Zionist enemy through the clauses of this initiative," said Salah al-Bardawil, a Hamas official.

With the Palestinian death toll now above 1,000, Israeli tanks again pressed deep into the Tel al-Hawa suburb in the southern area of Gaza City overnight. There was more heavy fighting to the east of the city, which is now effectively surrounded. One set of air strikes ignited a large fire in northern Gaza which burned for several hours, sending a thick cloud of acrid black smoke into the sky. An airstrike killed three people close to the apparently-empty home of the senior Hamas leader, Mahmoud Zahar.

The Israeli military said it struck 70 sites across Gaza overnight, including a mosque in the southern town of Rafah, which it said was used to store rockets. At least 11 soldiers were injured. Palestinian militants in Gaza fired at least 15 rockets into southern Israel early today, though there were no reports of injuries.

The Palestinian death toll rose to 1,028, with around 4,700 injured. On the Israeli side, 13 people have been killed, among them three civilians.

An Israeli decision on whether to accept the ceasefire or escalate the offensive will not come until Gilad has returned to Israel and briefed senior political leaders. Israel wants to ensure that Hamas halts its rocket fire and is no long unable to rearm itself in future.

Last night, the Israeli prime minister, Ehud Olmert, met his defence minister, Ehud Barak, and foreign minister, Tzipi Livni. Afterwards, Olmert's spokesman, Mark Regev, said that Israel would not accept a temporary ceasefire if it allowed Hamas to "rearm and regroup".

"Israel seeks a durable quiet that contains a total absence of hostile fire from Gaza into Israel and a working mechanism to prevent Hamas from rearming," he added.

Olmert has been keen to escalate the Gaza offensive in the hope of damaging Hamas even further, while Barak was reported yesterday to favour a "humanitarian" ceasefire, along the lines set out by Egypt.

The Egyptian proposal, which has been discussed for several days, appears to begin with a ceasefire of a week or 10 days, during which all fighting would stop but Israeli troops would remain on the ground in Gaza. Talks would then be held on the more difficult questions of stopping the smuggling of weapons to Hamas and lifting Israel's long economic blockade of the Gaza Strip.

However, it is thought that Hamas's conditions for any deal would probably include an immediate withdrawal of Israeli forces the moment a ceasefire begins. That may prove too much for Israel to accept. Hamas also wants an Israeli commitment to lift the blockade on crossings into Israel, and to open the Rafah crossing into Egypt, and it wants the ceasefire to be limited to six months or a year.

In separate talks, Israel has been pursuing an agreement with the US on security and intelligence cooperation, aimed largely at preventing arms smuggling to Hamas in Gaza.

Fresh evidence has emerged of the scale of devastation in Gaza. Around $1.4bn (£960m) worth of damage has been done to buildings, roads, power lines and other infrastructure in Gaza, according to surveyors from the Palestinian Central Bureau of Statistics.

It said 4,000 buildings have been destroyed and another 16,000 partially destroyed after nearly three weeks of Israeli bombing and ground fighting. Among the buildings destroyed were 18 school and university buildings, 10 electricity stations, 10 water and sanitation lines and 30 miles of roads.

In New York last night, the UN humanitarian chief, John Holmes, condemned rocket attacks from Hamas as well as Israel's military offensive. "These attacks are contrary to international humanitarian law and must cease," he said. "Yet any Israeli response must itself comply with international humanitarian law. Here, too, there is considerable and grave cause for concern."

"The situation for the civilian population of Gaza is terrifying, and its psychological impact felt particularly by children and their parents who feel helpless and unable to protect them," said Holmes, the UN undersecretary general for humanitarian affairs.