Prime Minister Ehud Olmert approved Wednesday a "severe and harsh" response to the ongoing Qassam rocket fire, including the resumption of targeted killings of Hamas commanders in the Gaza Strip.
"Israel cannot continue to show restraint in the face of the harm to its citizens," said Olmert.
"The Hamas government is behind the terrorist activity," continued Olmert. "Its unacceptable that at the same time it is requesting international recognition and financial assistance."
The decision came as Palestinian militants continued their rocket barrage on the western Negev on Wednesday, firing some 30 rockets at the area, wounding two people.
Also Wednesday, five Hamas militants were killed in two separate Israeli air strikes in the Gaza Strip.
Olmert held security consultations with the participation of Defense Minister Amir Peretz, Foreign Minister Tzipi Livni, Israel Defense Forces Chief of Staff Gabi Asheknazi, and other senior military and defense officials.
The Prime Minister's Office said the ministers approved "a series of actions to target the those who launch rockets and their commanders, to thwart their ability to fire [rockets] and to damage the terrorist infrastructure."
"Israel will take severe and decisive measures to put an end to these attacks and will allow the residents of Sderot and southern communities to live in peace," said David Baker, an official in the PMO.
This was the first time that Livni took part in security consultations, and the foreign minister's participation is a direct result of the Winograd Committee's recommendations in the wake of the Second Lebanon War.
Livni reported during the deliberations that the Foreign Ministry is engaged in an intensive diplomatic effort aimed at explaining Israel's stance and gaining international legitimacy for its response.
"The situation is unacceptable from Israel's standpoint," said Livni. "This is a terrorist organization that is part of the Palestinian government. We have made it clear to the international community that the situation in Sderot cannot continue."
"Until now Israel has shown restraint, but a situation in which without any reason, because of an internal Palestinian matter, they decide to harm Sderot in such a way, is unacceptable," she continued. "Nonetheless, we must understand there is no magic solution and we have to act in accordance with the circumstances that emerge."
Woman moderately to seriously wounded by Qassam, man lightly hurtA 60-year-old woman was moderately to seriously wounded and a man lightly hurt Wednesday when a Qassam rocket hit a house in Sderot.
The woman, who was wounded by shrapnel, was evacuated to Barzilai Hospital in Ashkelon. Four other people were treated for shock.
The rocket hit a residential complex, causing damage to much of the buildings. The complex is home to the family of Yaakov Yaakobov, who was killed by a Qassam rocket in November of last year.
On Wednesday evening, a rocket struck Sderot and knocked out power throughout the entire town.
Also Wednesday, the Israel Air Force fired missiles into a Hamas operations headquarters in the southern Gaza town of Rafah. Palestinian officials said four Hamas gunmen were killed in the attack, and at least 20 were wounded.
IDF sources confirmed that the attack came as a response to the continued firing of Qassam rockets over the past days on the western Negev. "Hamas must know that there is a price to be paid for launching rockets at Sderot and the surrounding area," the sources said.
Later in the day, the IAF fired missiles at a car carrying Hamas militants in northern Gaza. Palestinians sources said one militant was killed and two other Palestinians were wounded.
The IDF confirmed the airstrike, saying it targeted a Palestinian rocket crew that had just launched rockets at Israel.
One of the Qassams landed near a kibbutz in the Ashkelon Coast regional council, while two others fell north of Sderot. On Tuesday, a woman was seriously injured and some 30 others moderately to lightly wounded in the attacks.
On Wednesday afternoon, two Qassam rockets hit open areas in the western Negev, causing no damage or injuries.
A Qassam rocket also struck a home next to the Sderot residence of Defense Minister Amir Peretz early on Wednesday, causing damage but no injuries.
Peretz was not at home at the time of the attack, part of a barrage of Palestinian rockets that also hit a basketball court in the town Wednesday morning.
The defense minister blamed Hamas for the attack, maintaining they are "trying to cover up the murderous act of their men against Fatah militants."
Peretz, who was touring an IDF exercise in the north, called the rocket firing "intolerable and will reap a response." He reiterated that "Israel has no intention to intervene with the internal clashes in [Gaza] Strip, but we are not going to tolerate that these clashes will impact the security of Israeli residents; these events will reap a suitable response."
IAF helicopters attacked in response to the rocket barrage open fields in the northern Gaza Strip where Qassam rockets are suspected to be launched from.
Dozens of Sderot residents on Wednesday crammed into buses, provided by Russian-Israeli billionaire Arcadi Gaydamak, seeking refuge from the battered town. The residents will stay in a Be'er Sheva hotel courtesy of Gaydamak.
The prime minister, however, criticized the evacuation of Sderot residents, saying "these are exactly the pictures that Hamas is waiting for, and I will not grant any victory to terrorism."
Following the security consultations, Olmert instructed the relevant government agencies and organizations to take the necessary steps to provide the area's residents with the assistance they require.
The prime minister also called Sderot Mayor Eli Moyal and expressed his solidarity with the town's residents.
As a result of the barrage, the public bomb shelters in Sderot were opened for the first time on Tuesday, and classes will be canceled Wednesday for the second straight day.
Hamas openly claimed credit for the strikes and announced it plans to continue them.
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