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Not long after terror-linked Hamas political leaders were declared legitimate targets on Sunday, the IAF continued its crackdown on Gaza overnight and attacked a metal factory in Gaza, killing one man who IDF sources said was a weapons manufacturer affiliated with Hamas.
Earlier Sunday, the security cabinet granted the IDF a green light to strike at terror chiefs, including politicians, involved in the nonstop Kassam rocket fire on Sderot.
Two hours after the cabinet dispersed, IAF aircraft fired a missile at a terrorist cell walking down a street in the Gaza City neighborhood of Sajiya, killing eight and wounding 13.
Palestinians said the missile struck the home of Hamas lawmaker Khalil al-Haya. But the IDF said the strike was on the terror cell and it was possible that Haya's home was hit by shrapnel. Palestinians said at least six of the dead were Haya's relatives.
Lieberman: Decision is 1st step in eradicating Hamas
Fourteen rockets were fired at the western Negev on Sunday, raising the total to more than 130 over the past week.
During the cabinet meeting, Transportation Minister Shaul Mofaz stressed the importance of striking at the Hamas leadership, claiming the tactic could eventually stop the Kassam attacks.
"We need to work in a way that is clear that they will pay a price for all Kassam attacks," Mofaz told The Jerusalem Post in an interview following the cabinet meeting. "The leadership needs to feel hunted and persecuted."
Defense officials said the Hamas leadership okayed for targeted killings included politicians - also those based in the West Bank - who were involved in anti-Israel terrorist activity.
"If a political leader is involved in terrorism then he should be worried," a senior source said. "The ones who are involved know who they are."
In the interview, Mofaz warned of a "Hamas takeover of the Gaza Strip." If Fatah did not begin challenging Hamas, it would lose control over the Palestinian Authority within a year, he said. "If Fatah doesn't come to its senses and the international community doesn't support it, then Hamas will eventually take over the PA," he added.
Despite the urging of Strategic Affairs Minister Avigdor Lieberman, the cabinet decided that a widespread ground operation inside Gaza would be counterproductive. While it might reduce the Kassam rocket fire, the attacks would resume as soon as the IDF withdrew, most of the ministers believed.
The ministers spoke about ways of strengthening Fatah so it could counter Hamas's attempt to take over the PA. They discussed whether there was a viable alternative to PA Chairman Mahmoud Abbas. Israel is considering allowing Egypt or Jordan to transfer arms and ammunition to Fatah.
During the meeting, the ministers heard briefings from the Shin Bet (Israel Security Agency) and Military Intelligence. They were told that Abbas's weak standing was detrimental to his leadership and created a serious threat for Israel. The intelligence officials also raised concerns that global Jihad elements would begin gaining strength inside Gaza.
Foreign Minister Tzipi Livni suggested strengthening Fatah and sealing off the Philadelphi Corridor - the main conduit for Hamas weapons smuggling into Gaza.
Livni's proposal to deploy a multinational force along the corridor was dismissed by defense official. They said Europe would be unwilling to send troops to Gaza where they would most probably be under threat by Hamas and Islamic Jihad.
Earlier in the day, Prime Minister Ehud Olmert said the IDF's military response would escalate as the Kassam attacks on Sderot continued.
"The Hamas terror organization, which is part of the Palestinian government, proved once again to the world that it is a murderous terrorist organization," he said. "Dozens of Hamas men have already been killed by our actions. They are paying, and will continue to pay, a high personal price."
Olmert told the cabinet the government would pay for the construction of security rooms in homes and apartments in Sderot where they are lacking at a price of some NIS 300 million to NIS 500m.
He said bureaucracy had kept this from happening in the past, and that the decision had nothing to do with billionaire Arkadi Gaydamak's declaration that he would pay to reinforce the homes and apartments in Sderot.
The cabinet meeting took place before the security cabinet discussed operative steps to take inside Gaza.
Defense Minister Amir Peretz briefed the cabinet. He said 106 Kassams have fallen on the western Negev in the last six says, and another 36 mortars - most of them in Sderot. Twenty-two Israelis have been wounded - one of them seriously - in these attacks, he said.
Peretz said Hamas had the upper hand in the internal Palestinian fighting, which he said was clearly the background to the stepped up attacks on Israel. Some 73 Palestinians have been killed in the fighting, he said.
Peretz said PA Prime Minister Ismail Haniyeh had tried to calm down the internecine fighting, but failed - something that demonstrated his weakness.
He said Hamas was preparing for an escalation of violence, including trying to carry out suicide bombings and kidnappings.
Peretz said Israel was not evacuating Sderot's citizens, but last week the decision was made to remove 800 hardship cases until after Shavuot.
"I don't think the country's national strength will be helped by leaving elderly people without any children in Sderot at this time," he said. He said the Defense Ministry was not competing with Gaydamak, who evacuated hundreds of residents.
In a related development, Livni is scheduled to met in Sderot on Monday with EU foreign policy chief Javier Solana, who will start a regional swing on Monday that will take him to Israel, the PA and Egypt to discuss the current tension in the region. Diplomatic officials said Solana's planned visit to Sderot was an attempt by the Europeans to set a balanced policy and show that Kassam attacks were illegitimate.