The Israel Defense Forces last week completed its preparations for a possible major incursion in the Gaza Strip, including special training for most of the units that might be involved and an exercise at the command headquarters level. But military sources say the government prefers to avoid an escalation with the Palestinians.

At the end of last year, Chief of Staff Dan Halutz ordered that preparations be advanced for a possible action in the Gaza Strip that would use large numbers of ground forces. Infantry, armored units, artillery and intelligence units underwent training, mainly at the Tzeelim base in the South, and the Southern Command headquarters held an exercise last week.

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The scenario for launching the operation was large-scale rocket fire on western- and northern-Negev communities and the abduction of soldiers. In the exercise, the Israel Air Force also responded against Palestinian terror targets.

A security source said last week that Israel could not avoid responding in the long term as terror organizations grew stronger in the Strip. Intelligence assessments say both Hamas and Islamic Jihad have rockets with a range of 15 kilometers, but efforts are being made to significantly increase their range.

In the first response of its kind in recent months, the air force last week hit a rocket launching team about to fire a rocket from the northern Gaza Strip. One Islamic Jihad activist was killed and three were injured.

The IDF also received approval to operate in a small area on the Palestinian side of the fence around the Gaza Strip to prevent the placing of explosive devices against Israeli forces patrolling the border, and to pinpoint tunnels for weapons smuggling.

Shin Bet security forces head Yuval Diskin said two months ago that at least 10 such tunnels had been dug in the area of the fence.

Hamas is also digging tunnels, as well as bunkers in settled areas of the Gaza Strip, to stymie a ground attack. It is also improving its array of anti-tank missiles.

The IDF believes the chances of such an operation are slim because of government concerns in light of the poor outcome of the war in Lebanon. In an interview in Friday's Haaretz, Prime Minister Ehud Olmert said such an action is not "the first thing I seek to do."