Shin Bet security service chief Yuval Diskin said Sunday that Hamas is capable of firing rockets that can strike targets as distant from Gaza as the outskirts of the Negev capital of Be'er Sheva.

He told a meeting of the cabinet that rockets could also hit Kiryat Gat and Ashdod, cities which thus far were seen as beyond range. Hamas' armed wing used the last six months of relative calm to improve its medium and long-range rockets and mortars, he said.

"We believe that if we strike at significant assets, they will respond with longer-range fire," Diskin said.

Hamas officials, meanwhile, are not ruling out a renewal of suicide bombings in Israel. Ayman Taha, a Hamas representative in Gaza, told Haaretz that under the current conditions, no cease-fire is in effect whatsoever. "Rocket fire is in the hands of the military wing. It will decide how to react," he said. "Resistance must continue in every way and by every means, as long as the occupation continues."

In the course of the cabinet meeting, a number of ministers took Defense Minister Ehud Barak to task for what they termed the failure of his policy of relative restraint in the face of continued rocket fire into Israel from Gaza.

Barak told the cabinet that if Israel wants to retake the Strip, a broad offensive would be needed. But he said that there was no magic formula by which, in one blow, quiet would be restored and Hamas taken apart.

According to Diskin, Hamas has lifted its reins from other armed organizations, and had resumed firing on its own.

"Make no mistake, Hamas is interested in continuing the truce, but wants to improve its terms. It wants us to lift the siege [on Hamas-ruled Gaza], stop [IDF] attacks, and extend the truce to include Judea and Samaria [the West Bank]," Diskin said.

The is no effective mediator between Israel and the Palestinian side, he said. The Egyptians are sitting on the fence, and there's a lack of trust between Hamas and Egypt, he continued, adding that were Hamas to find itself in a situation in which it needed Egyptian mediation, the Egyptians will again be players.