Prime Minister Benjamin Netanyahu said at the cabinet meeting yesterday that Israel had no choice but to retaliate when faced with attack, and would stop "every attempt to fire at Israel."

Israel has not agreed to a cease-fire with the Islmic Jihad organization in Gaza, Netanyahu told his ministers, who gathered for a special cabinet session in Safed. Israel's defense policy was based on two principles, he added: "Kill or be killed," and "He who harms you should bear the blood on his head."

"I appreciate very much the fortitude of the residents of the south, and I promise that the other side will pay prices that are far higher than those it has paid up until now - until it stops firing. There is no cease-fire. The Israel Defense Forces will defend the residents of the south and will eliminate those who launch missiles," said the prime minister.

"I suggest that Hamas, Jihad and the other organizations not test our determination to act on the two principles I have described here," Netanyahu warned. "We do not want the situation to deteriorate, but we will defend Israel's citizens determinedly, aggressively and effectively." He added that it is Hamas that controls Gaza, and is responsible for the rocket fire and for keeping the peace - even if the Islamic Jihad is the one doing the shooting.

Netanyahu made his remarks shortly after that organization said it would accept an Egyptian-mediated cease-fire if Israel agreed to halt its "aggression" against Gaza.

Despite the continued rocket fire on the south, the Foreign Ministry's efforts to convince other countries to denounce the attacks met with realtively little success.

European Union High Representative for Foreign Affairs Catherine Ashton condemned the recent hostilities along the border with the Gaza Strip, criticizing the targeting of civilians "wherever they are."

Commenting on the escalation in the last few days, Ashton said in a statement yesterday that she was "very concerned at the renewed exchange of fire in Gaza Strip and the south of Israel, following the firing of rockets by Islamic Jihad from Gaza into Israel."

She added, "I wholeheartedly condemn the indiscriminate targeting of civilians wherever they are. I call on all sides to respect the cease-fire brokered by Egypt."

In another response to the mounting attacks, the U.S. State Department reminded both parties yesterday that "violence will not advance but will impede the hope for peace."

"We urge all parties to stop the violence and engage in direct negotiations, which we believe is the only way to achieve comprehensive peace," State Department Beth Gosselin spokeswoman said.

President Shimon Peres said the rockets fired Gaza demonstrate a clear attempt to kill civilians. As to claims that Israel has reacted with disproportionate force, Peres asked whether the firing rockets is proportional. Israel is defending itself, he stressed, and every other nation in the world would do the same, as every country is obligated to defend its citizens.