More than 285 rockets have been launched from Gaza since May 15, killing two Israeli civilians, wounding more than 20 others and sending hundreds fleeing from the southern town of Sderot that has borne the brunt of the fire.
Olmert's reiterated a threat to continue air strikes despite the reduction in the number of rockets launched.
"Hamas is trying to draw us [Israel] into their civil war"
Zafon, Beersheva, Israel
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"In view of what appears to be a drop in Qassam fire, I would like to make it clear that we are not negotiating," he said at the weekly cabinet meeting on Sunday.
"We are not committing ourselves to changing the patterns of our operations."
"We will continue to take action against terrorist elements... in the Gaza region and the West Bank without letting up."
Earlier however the Egyptian Al-Ahram newspaper printed an interview with Moussa Abu Marzouk, Hamas' deputy political leader who said: "We may agree to a one-year ceasefire. Both parties have to abide by it."
Abu Marzouk, who, along with Hamas leader Khaled Mashaal, lives in exile in Syria, demanded that Israel also agree to a truce with Hamas, saying the only way for success was calm on both sides.
Several senior Hamas leaders have been in Cairo over the past week for talks with Egyptian officials on ways to end the fighting with Israel.
Mohammad Nazal, a member of the Hamas political bureau, also confirmed that Hamas is considering a truce.
Nazal said: "Some private ideas were presented to Hamas [by Egyptian mediators] to reach a truce with Israel, and Hamas is about to undertake the suitable decision."
Israel said it was sceptical of Hamas' intentions.
Mark Regev, a foreign ministry spokesman, said: "The current ceasefire in Gaza is unfortunately a sham. It would seem that before we talk about expanding the ceasefire, we should first get it right."
Hamas wants to get Israel to extend any Gaza ceasefire to the West Bank, where Israeli troops frequently conduct arrest raids against fighters.
Under a plan being worked out by Abbas, Gaza fighters would halt rocket fire for a month to allow for negotiations on a more comprehensive ceasefire that would include the West Bank.
Meanwhile Al Jazeera reported that Ismail Haniya, the Palestinian prime minister, had nominated Ghazi Hamad for the post of interior minister.
Hamad is one of the leading members of Hams and Al jazeera's correspondent reported that many members of Fatah had also given their support to his nomination.
Hamad has been serving as a spokesman for the prime minister and is so far the only candidate for a post that has been a source of great dispute in the formation of the Palestinian unity government.
The previous incumbent resigned saying it was an empty position given that although the interior minister is nominally responsible for security, in reality armed groups within Hamas and Fatah control affairs.