Defense Minister Ehud Barak said Thursday that a large scale ground operation in the Gaza Strip is a "real and tangible" response to the escalation of violence in southern Israel, with Gaza militants firing an unusually high number of Qassam and Grad rockets into Ashkelon, Sderot and western Negev communities in recent days.

Barak spoke one day after a 47-year-old college student was killed outside Sderot as some 50 rockets pounded southern Israel.

"We must prepare for continued escalation," the defense minister said. "We are not eager [to carry out a large-scale ground operation in Gaza], and not shying away from it," the defense minister said.

"There is a wide range of considerations regarding the timing, which we can't share with the public or with Hamas. We will get there after we examine all the other possibilities," Barak added.

Barak has been warning for months that such an invasion is growing near. At a high-level security meeting at his office in Tel Aviv Thursday, Barak was quoted as saying, "Israel cannot accept this situation. The deterioration is the fault of Hamas. Israel will reach the perpetrators [of the Qassam rocket fire] and Hamas will pay a price for its actions."

Barak spoke during the course of the day with political officials as part of efforts to prepare for another escalation of violence. Among others, Barak spoke with the Quartet's envoy to the Middle East Tony Blair, who said that Hamas was to blame for the escalation in violence.

Peres: We'll defeat Qassam fire like we halted suicide bombings

President Shimon Peres said on Thursday that Israel will manage to defeat Qassam fire in the same way it managed to put an end to suicide bombings.

During a visit to Beit She'an, Peres spoke about the volatility the city underwent during the second Intifada several years ago, when suicide bombers repeatedly infiltrated Israel from the nearby West Bank and carried out suicide attacks against Israeli targets.

"There was a time when we thought that security could not be restored in the city, but now it has already been forgotten. In the same way we managed to triumph over suicide bombers, we'll triumph over the rockets."

When asked whether he supports the release of Palestinian prisoners in exchange for the release of the abducted IDF soldiers, the president said that "we have to do everything that needs to be done, even if it takes a heavy toll, but we must be cautious not to do unnecessary things." However, Peres emphasized that he is opposed to releasing convicted terrorists.

Dichter: Current government policy will not stop Qassam fire

On a tour of the Qassam-battered town of Sderot on Thursday, Public Security Minister Avi Dichter rejected calls to reoccupy the Gaza Strip and urged the government to reconsider its policy against the intensifying rocket attacks.

"Whoever talks about entering and occupying the Gaza Strip, these are populist ideas which I don't connect to, and in my opinion, no intelligent person does either," he told reporters during a press conference at Sapir College, where an Israeli civilian was killed by Qassam fire the day before.

He called on the government to come up with an alternative policy for fighting the rockets, saying: "I recognize everything the Israel Defense Forces and the Shin Bet are doing, but right now they are operating according to an existing policy."

"This is not what is going to stop the Qassam fire and this must be brought to the cabinet for discussion," he added.

Just before Dichter's address, a Qassam exploded on the college campus, lightly wounding one of his guards. Dichter was not present at the site at the time of the attack.

Immigration Absorption Minister Jacob Edrey, who accompanied Dichter on his Sderot tour, took a harsher line, saying: "The government will need to contend and make difficult decisions. We are not far from the day in which we will have to go in and reoccupy all of Gaza."

At the end of the press conference, the Red Color alert sounded, and the meeting was concluded in a protected shelter.

Prime Minister Ehud Olmert said on Wednesday that Israel is at war with Palestinian militants and vowed the Israel Defense Forces would continue to fight them until security returns to citizens of southern Israel.

"We are in a war which sometimes exacts a high cost, and sometimes does not," the prime minister said.

"We will continue fighting in order for the danger to the residents of the south to end. This is a long process, and a painful one, and we haven't any magic formulas to solve this today. We are suffering painful blows, but are returning more painful blows."

Olmert said however that Israel would not change its overall policy in the Gaza Strip. "What is happening today happened a week ago, and is likely to happen in the near future," he said.

"No one in Hamas, neither among the low ranks nor among the senior ranks, will be immune to that war," Olmert threatened.

The prime minister added that the Palestinians are "testing Israel's patience" to its limit.

The prime minister made the comments during a visit to a Nissan factory in Tokyo.

Officials: Response to rockets will be harsh

A senior defense official said Wednesday night that the Israeli response to the rocket fire on Sderot and Ashkelon is expected to be particularly harsh, and that Israel does not intend to let pass Hamas' decision to escalate its offensive measures.

Military sources told Haaretz that in the next few weeks the IDF will complete its preparations for a major ground offensive in the Gaza Strip. However, they added that the final decision on a wide-scale incursion is in the hands of the government, and no decision has been made yet.

Hamas fired some 50 rockets at Israel on the worst day of fighting the Gaza Strip border has seen in more than two weeks. Several rockets hit Ashkelon.

Rice: Hamas to blame for Gaza situation

Meanwhile, U.S. Secretary of State Condoleezza Rice called for the rocket attacks on Israel to stop and blamed Hamas for the situation in Gaza, speaking after a meeting with Olmert in Tokyo on Wednesday.

Rice is set to visit Israel and the West Bank next week to try to push along U.S.-brokered peace talks complicated by the growing violence.

The secretary of state also voiced concern about Palestinian civilians killed in IDF operations in the Gaza Strip, but stopped short of an explicit call for Israel to exercise restraint.

Asked if she had urged Olmert not to use disproportionate force in responding to rocket attacks from Gaza, Rice told reporters: "I think that's not a good way to address this issue. The issue is that the attacks - rocket attacks need to stop."

She said she had reiterated to Olmert U.S. concerns for the humanitarian situation.

"I am concerned about the humanitarian condition there and innocent people in the Gaza who are being hurt. We have to remember that the Hamas activities there are responsible for what has happened in Gaza ... But, of course, we are concerned about innocent people and we are concerned about the humanitarian situation," she said after the one-hour breakfast meeting.

Sources in Olmert's entourage said that he was briefed by the military secretary on the rocket fire against Sderot and the Israeli civilian killed there. The prime minister was informed that the Hamas was responsible for that attack, and the assessment was that it came in response to the killing of six members of Hamas during IDF operations in the morning.

However, regarding the possibility of an offensive in the Gaza Strip, Olmert said: "I do not recall speaking even once about a ground operation in the Strip."

Earlier, Olmert said that he had not received any concrete offer from Hamas for a cease-fire with Israel.