The Israeli army says it wants to relocate Palestinians rather than move its barrier.
The statement was issued after consultations between Ehud Olmert and security chiefs.
A rocket was fired from Gaza shortly after the statement was released, the Israeli military said, without providing further details.
Israel Radio said the projectile landed in an open field in the Sderot area, causing no injuries or damage. No armed group immediately claimed responsibility.
Olmert has come under growing public criticism for failing to retaliate for more than 60 rockets fired by fighters in the Gaza Strip since a November 26 truce began, while also under US and European pressure to keep the ceasefire.
A 14-year-old boy was in a critical condition and another, also 14, was seriously wounded by the rocket that on Tuesday slammed into a street near a house in the town of Sderot, a frequent target.
Islamic Jihad, a Palestinian armed group, claimed its forces had fired the rocket, and called it retaliation for Israel‘s continued military raids on its hideouts in the occupied West Bank.
The truce had halted Israeli-Palestinian fighting in and near the Gaza Strip, but Israel has continued raids it says are to prevent attacks from being launched from the West Bank.
Israel has killed 15 Palestinians since the ceasefire began, all but one in the West Bank. About half were armed men.
In other news, Al Jazeera reported on Wednesday that Israeli forces detained overnight 22 Palestinians from various West Bank areas.
Activists of different factions were among those arrested in the operation which focused on areas in the northern West Bank.