Vice Premier Haim Ramon on Monday acknowledged that Israel was holding talks with Hamas, in violation of a government decision not to conduct talks with the Islamist Palestinian group until it complies with the demands of the Quartet.

The Quartet of Mideast peace negotiators - The United States, the United Nations, the European Union and Russia - have stipulated that Hamas must renounce violence, recognize Israel and abide by previous agreements.

Ramon, speaking at a Kadima faction meeting, criticized Israel's negotiations with the militants group and voiced hope that the cabinet would soon make a strategic decision not to accept the Hamas presence along Israel's southern border.

"The IDF knows what to do," he said. "We are not fighting a terror organization, but rather a terror nation called Hamastan."

Ramon's comments marked that first time a minister in the Knesset has confirmed that Israel was holding direct talks with Hamas.

Prime Minister Ehud Olmert said during the faction meeting that "decision time in the south is approaching," and that Israel can no longer accept the ongoing rocket fire from the Gaza Strip into southern Israeli communities.

Meanwhile Monday, French Foreign Minister Bernard Kouchner said that France had maintained informal contacts with Hamas recently. Kouchner confirmed reports that a retired French ambassador had met with high level Hamas officials about a month ago.

Also Monday, Defense Minister Ehud Barak met with Egyptian President Hosni Mubarak and made no indication that Israel would accept the Egypt-brokered cease-fire agreement with Hamas. Barak told the Egyptian president that Israel would not consider a truce until the attacks from Gaza against Israel stopped entirely.