"[Israel] has demanded a long-term, open-ended truce and not an 18-month truce as had been established," he said.

Egyptian mediation

Egypt has been attempting to broker a lasting truce between the two sides since Israel ended its 22-day assault on the Gaza Strip, which left more than 1,300 Palestinians dead.

Israel unilaterally decided to halt the offensive on January 18, before Hamas announced its own ceasefire the following day. 

There had been media reports in recent days suggesting that the two sides were close to a deal after Egyptian officials said that a truce could be agreed "in days".

However, Olmert's office on Saturday said Israel "is not conducting any negotiations and will certainly not reach any understandings with Hamas".

"We emphasise that now what stands on top of Israel's priorities are: the security of the citizens of the south of Israel and the release of Gilad Shalit. Israel will exert all efforts to promote these two goals."

Hamas has previously said that negotiations over Shalit's release should take place as part of separate talks on a possible exchange for hundreds of Palestinian prisoners held in Israeli jails.

Crossings demand

Khaled Meshaal, Hamas's exiled political leader, told Libyan television on Thursday that "until now there is no agreement concerning Shalit. Israel is trying to mix up the files and link his fate to the opening of the crossings".

Shalit was captured in a cross-border raid by Palestinian fighters in 2006 [EPA]
Hamas wants the crossings into the Gaza Strip reopened as part of a truce deal to bring to an end the crippling blockade of the territory that has restricted the delivery of basic supplies, food and fuel.

Since the war on Gaza ended there have been sporadic rocket attacks by Palestinian fighters and air raids by the Israeli military.

The Israeli military said on Saturday that a missile fired from Gaza hit the town of Ashdod late on Friday. The Israelis responded by carrying out a series of air raids on the Palestinian territory, leaving at least one Palestinian fighter dead. 

Israel had launched its 22-day offensive on Gaza with the stated aim of stopping the rocket attacks and destroying the infrastructure of the Hamas government, which seized full control of Gaza after pushing out security forces loyal to Mahmoud Abbas, the Palestinian president, in June 2007.