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The diplomatic effort to obtain the release of Corporal Gilad Shalit, who was abducted by Palestinian militants last week, seemed to have dead-ended yesterday in light of tough talk on both sides. Last night a renewal of the Israel Defense Forces' ground incursion into the Gaza Strip appeared imminent.

Senior military officials told Haaretz yesterday that the IDF has submitted a plan for escalating measures against the Palestinian Authority. They said the government has not approved any plan to assassinate Hamas government officials.

Earlier last night Golani Brigade soldiers holding the Haniyeh airport in the southern Gaza Strip shot three armed Palestinians who approached their position. The IDF believes all three were killed, but there was no immediate confirmation from the Palestinian side. The militants were apparently planning to fire an anti-tank rocket at IDF troops and to detonate explosives.

In yesterday's weekly cabinet meeting Prime Minister Ehud Olmert said: "We and the international community know that Gilad is being held by a bloodthirsty gang of terrorists who are causing us much suffering, but who are mainly hurting the Palestinian population, which is bearing the results of this terrorist activity." Olmert also reiterated his refusal to release Palestinian prisoners in return for Shalit.

Senior Hamas official Osama Al-Nizmi said yesterday that he did not believe the kidnappers would accept the compromise suggested Friday by Egyptian President Hosni Mubarak, of an Israeli promise to release prisoners in the future in return for Shalit's immediate release.

Defense Minister Amir Peretz said last night that Israel has no intention of returning to Gaza and governing the Palestinians. He said the IDF will carry out short and limited offensive operations in Gaza as part of efforts to effect Shalit's release and an end to Qassam rocket attacks on Israel.

Shin Bet domestic security chief Yuval Diskin told the cabinet he opposed any negotiations over the release of Shalit. He hinted that the kidnapping could bring down the Hamas government. "It could last for weeks, or for months," he said.

Two Qassam rockets and two mortar shells were fired at Israel from Gaza yesterday, but caused no injuries or damage.

The Knesset plenum will consider six no-confidence motions submitted by opposition factions. Three concern the IDF incursion into Gaza and were submitted by the three Arab parties.

Prime Minister Olmert yesterday expressed his gratitude to U.S. Secretary of State Condoleezza Rice for Mubarak's efforts to bring about Shalit's release and said the key to resolving the kidnapping affair lies in Damascus.

"The orders to carry out terror operations all come from there and the Syrian leadership must dismantle the terror groups' headquarters in its territories," Olmert said.

Rice expressed concern for the humanitarian and military situation in Gaza.

Two members of the Popular Resistance Committees were arrested about three weeks ago on suspicion of plotting to kidnap and murder IDF soldiers, according to details released yesterday. Apparently IDF and Shin Bet forces detained Gaza residents Ibrahim Magdub, 22, and Mohammed Assar, 20, on June 11, after they infiltrated into Israel from Egypt, via Sinai.

According to their interrogators, the men planned to abduct and kill soldiers, and then negotiate over the return of the bodies in exchange for the release of Palestinians jailed in Israel.

Shin Bet officials said the two were acting on the directives of PRC commander Jamal Abu Samhadana, who was killed last month in an Israel Air Force strike on the organization's headquarters.

Gideon Alon, Aluf Benn, and Mijal Grinberg contributed to this report.