Israeli and US security officials say Hamas's forces are expanding faster and receiving more sophisticated weapons and training than those under the control of Mahmoud Abbas, the Palestinian president.
"The question is: Does it have to be military activity? If it has to be military activity by us, does it have to be right now?" Olmert said when asked about warnings by top security advisers about Hamas's build-up.
In an interview with Time magazine released on Friday, he called Ismail Haniya of Hamas, the current Palestinian prime minister, a "terrorist" and accused him of recently transferring more than $1m to fighters to carry out attacks against Israel.
Hamas 'ready'
Speaking at one of Hamas's training camps as fighters practised firing rocket-propelled grenades and automatic weapons, Abu Ubaida, a spokesman for Hamas's armed wing, said the group would be ready for any conflict with Israel.
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He said: "Raiding Gaza will not be that easy and they will be surprised of the tactics we will use."
Israeli security sources estimate that Hamas now has about 10,000 fighters, and say that the group's armed wing has been busy digging tunnels and upgrading its rocket arsenal for a possible confrontation.
Israel and the US say Hamas is receiving money and equipment from Iran.
Washington plans to provide $59m to bolster Abbas's presidential guard.
Syria contacts
The Israeli prime minister also said he was open to peace talks with neighbouring Syria after "low-level contacts" between the two countries.
Speaking to Time, he said: "I don't rule out negotiations with Syria. It just needs to be done in a manner that will guarantee that we can move forward rather than get stuck almost in the beginning.
"We [must] be certain that when we talk about negotiations for  peace with Syria that what we have in mind and what they have in mind is broadly the same."
'Not serious'
Olmert said he did not take part recently in what he described as "low-level contacts" between the countries.
He said: "They weren't serious, and weren't considered so by the Syrians."
He also welcomed peace-making efforts by Saudi Arabia, which hosted the recent summit of the  22-member Arab League that adopted the initiative.
Time quoted Olmert as saying: "I look very favourably at the active role Saudis are now playing in the Middle East for many years."