Prime Minister Ehud Olmert on Thursday blamed Hamas for the deadly cross-border terror attack which killed two Israeli civilians a day earlier at a fuel depot near the Gaza border, and vowed that the Israeli response to the attack would considerably weaken the Islamist group.

"Hamas is responsible for what is happening in the south," Olmert told lawmakers from his centrist Kadima party. "I promise you that the response to Hamas will be one such that it will not be able to continue to operate as it does today."

Olmert also told party members that Israel would simultaneously keep up "serious" negotiations for a peace agreement with Palestinian President Mahmoud Abbas.

"Alongside our war against terror and Hamas, we will continue to hold serious and responsible negotiations that can lead us to agreements with moderate Palestinian President Mahmoud Abbas," he said.

Olmert said it would be possible to reach "understandings" with the Palestinians this year that would lead to a future Palestinian state, but added, "I don't see any chance that we can implement an agreement in the coming period."

Israel on Wednesday cut off the only source of fuel to Gaza's 1.4 million residents, after militants from Gaza infiltrated Israel and killed two civilians at a fuel depot near the border.

Senior Israeli security sources said Wednesday that Israel does not intend to change its policy at Gaza Strip border crossings following Wednesday's terror attack at the fuel depot at Nahal Oz.

The activity at the fuel terminal was halted after the attack, but the sources said Israel had not decided to stop fuel shipments to Gaza completely and would probably resume the supply in a few days.

"We have an obligation to prevent a humanitarian disaster in Gaza," Deputy Defense Minister Matan Vilnai told Army Radio on Thursday.

Islamic Jihad claimed responsibility for Wednesday's attack, along with a group linked to the Al-Aqsa Brigades. A spokesman for the Popular Resistance Committees said that members of three groups, not including Hamas, infiltrated the crossing.

Still, Israel remains convinced that Hamas was behind the planning of the attack.

Israel said Wednesday that it plans to launch a diplomatic offensive with the United Nations and international aid organizations to emphasize Hamas' responsibility for the attack and the consequent humanitarian crisis in Gaza.

Hamas spokesman Sami Abu Zuhri said Thursday that the attack on the fuel depot was "one of the many choices Hamas has. This was the first option, and the beginning of the eruption against the blockade," he said.

On Thursday afternoon, hundreds of demonstrators began flocking to main intersections of Gaza City, the coastal strip's largest town, to protest Israel's blockade and economic sanctions.

"Rescue Gaza, lift the siege imposed on Gaza," read signs raised at one junction.

Abu Ahmed of Islamic Jihad said the attack deliberately targeted the fuel depot on which Gazans depend.

"This fuel [from Israel] is dipped in humiliation," he said, "because people wait for it for hours. If their fuel means humiliation for us, we don't want it."