No deal

The truce refers to a ceasefire between the Israeli army and fighters in Gaza that has been repeatedly broken since the middle of May, just before Hamas' takeover of Gaza in June.

Miri Eisin, an Israeli government spokeswoman, said: "There is no question of striking any ceasefire deal with them [Hamas]. They are a terrorist organisation recognised as such by the international community that took power as a result of a putsch."

The Israeli army said two rockets were fired into Israel from Gaza on Sunday, without causing injuries or damage.

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Watch Hamas preparations
for an Israeli attack

On Thursday, Hamas called on Palestinian fighters to stop firing rockets at border crossings between Gaza and Israel.

The border crossings are often the targets of rocket and  mortar attacks and have been largely closed since Hamas took control of Gaza three months ago.

Last week, a rocket fired by Gaza fighters hit an Israeli army base, wounding scores of soldiers, most of them lightly.

Following the strike, Hamas put its forces on high alert ahead of an anticipated large-scale Israeli offensive in revenge for the rocket fire and most senior Hamas officials in Gaza have kept a low profile, fearing an attack by the Israeli military.

Cabinet fudge

Meanwhile, the Israeli government held its regular Sunday cabinet meeting in Jerusalem.

Mike Hannah, Al Jazeera's correspondent in Jerusalem, said the meeting had created "more questions than answers".

Olmert had said that Israel would release a number of Fatah prisoners for Ramadan, which has already started.

But after the meeting it was announced that no decision would now be made on the issue until at least next week.

During the cabinet meeting, Olmert also raised the discussions he had held with Mahmoud Abbas, the Palestinian president, ahead of planned peace talks in November.

Olmert had stressed to the cabinet that he had only agreed declarations of "intent" to be discussed in the peace talks rather than "principles" with Abbas.

Hannah said Palestinians would see this as "cutting short negotiations before they have really begun".