Hamas could feasibly establish a military division of some 10,000 soldiers with an operational force similar to Hezbollah's if it continues to strengthen at its current pace, Israel Defense Forces GOC Southern Command Yoav Gallant said Tuesday.

Meanwhile, Prime Minister Ehud Olmert will convene his political-security cabinet on Wednesday to discuss the IDF's policy in the Gaza Strip and work out responses to ongoing incidents of Palestinian Qassam fire and arms smuggling.

Sources said no decisions would be made on expanding the IDF's current operation until Olmert's return from the United States in two weeks.

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Gallant told the Knesset Foreign Affairs and Defense Committee that Hamas could bolster its forces to include anti-tank divisions and commandos, and could gain access to advanced weapons systems as well as night-vision apparatus.

The IDF is preparing to weaken Hamas' efforts, but the plan must first be approved at the political level, Gallant said. Hamas is currently in its first phase of force building and does not yet have these advanced capabilities or a hierarchical system of divisions and brigades, he said.

Gallant said that the IDF's current operations in and around the Gaza Strip are mainly defensive, aimed at quelling any immediate threats posed to Israeli citizens from Qassam rockets and terror organizations. He emphasized that that the army was awaiting goverment approval before operating to weaken Hamas' plans for bolstering its forces.

Delegates to the meeting on Monday said that the picture drawn for them by Major Gallant was worrisome. MK Effi Eitam (National Union - NRP) said, "IDF is busy with routine security measures in the Gaza Strip, and is not dealing with strategic problems," adding that militants in Gaza have been smuggling military-grade weapons through hundreds of tunnels.

Defense sources said that Defense Minister Amir Peretz and IDF Chief of Staff Dan Halutz approved on Sunday a series of new operations to be carried out in the Gaza Strip in the coming days, though the extent of the operations does not differ from its current actions.

PA: IDF kills two Hamas militants
IDF killed two Hamas militants Tuesday morning in southern Gaza Palestinian officials and the army said.

Later Tuesday, Israeli naval vessels also fired at two Palestinian boats near the Gaza coast earlier in the day, wounding two fishermen and later detaining several people on board, Palestinian security sources said.

An Israeli military spokesman said troops on the vessels fired warning shots at the boats after they crossed into a restricted zone, then arrested four Palestinian suspects. He estimated they would be freed soon.

The Hamas gunmen were killed in a battle in Khouza, a village east of the Khan Younis refugee camp that borders Israel, Palestinian security officials and Hamas sources said.

Three other Palestinians have been wounded in the fighting, which is ongoing, they said, among them a militant from the Al-Aqsa Martyrs Brigades who was critically wounded.

The army confirmed troops were operating in the area on a mission to destroy terrorist infrastructure. The forces fired on armed men that appeared to be planting a bomb in the area and identified hitting several gunmen, the army said.

Israel has been operating in the Gaza Strip since late June when Hamas militants carried out a cross-border raid on a military outpost, killing two soldiers and capturing a third, Corporal Gilad Shalit.

Late Monday, the Israel Air Force fired missiles at a house in southern Gaza that the army said belonged to a militant. The army said the structure was used to store weapons. No one was wounded in the air raid.