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The security cabinet is expected to discuss on Sunday whether, and to what degree, Israel should support Fatah to keep Hamas from taking complete control of the Gaza Strip, senior government officials said Saturday night.
The officials said there had been a great deal of "quiet diplomatic activity" in recent days with Egypt, Jordan and the US regarding ways to stabilize the situation in Gaza.
Report: 'Israel considers aiding Fatah'
Government officials would not discuss whether Saudi Arabia was involved as well, beyond saying that Israel did not have direct contacts with Riyadh.
The defense establishment has yet to set a policy on assisting Fatah in its battle against Hamas. Last week, Israel let several hundred Fatah "soldiers" enter Gaza from Egypt, where they were being trained.
According to defense officials, a request from Fatah and the US to allow either Egypt or Jordan to transfer weapons, ammunition and other military equipment to forces loyal to Palestinian Authority Chairman Mahmoud Abbas is being considered by the government, and a decision will be made in the coming days.
The goal of this flurry of diplomatic activity, the officials said, was to make sure that everyone realized that it was in no one's interest - not Israel's, Jordan's, Egypt's, the region'sâ€š or the world's - for Gaza to fall under Hamas's control.
Prime Minister Ehud Olmert has been saying recently in closed-door meetings that with all their corruption and other problems, Fatah at least says it is interested in dialogue and wants a two-state solution. Hamas, he has pointed out, is less corrupt, but does not hide its desire to annihilate Israel.
Sunday's security meeting is a continuation of a discussion that began a week earlier, with the heads of the IDF and the security services giving an exhaustive briefing on the situation and Israel's options.
Government officials said that after receiving an update briefing, the security cabinet was expected to make operative decisions, but that those decisions were unlikely to be significantly different from the ones Olmert, Defense Minister Amir Peretz and Foreign Minister Tzipi Livni decided upon last week, after consultations with senior security officials.
"We are not at a stage where we are going to approve widespread ground incursions," an official in the Prime Minister's Office said. "The decisions are unlikely to be drastically different than last week's, but rather a more clear-cut policy on what our objectives are inside Gaza right now."
Peretz dismissed the possibility of a large-scale operation in Gaza, saying a massive incursion "did not serve Israel's security."
He also rejected the option of striking infrastructure facilities in the Gaza Strip, such as electricity, fuel, water and communications, saying this "would cause the entire Palestinian population to unite around Hamas."
While Israel was not planning to reenter Gaza, Peretz stressed that limited operations would continue in the coming days. "We intend to continue to initiate operations... We will not turn down any operative proposal that would help prevent any of our enemies from harming us," he said.
Asked whether PA Prime Minister Ismail Haniyeh of Hamas and the head of Hamas's military wing, Ahmed Jaberi, could be targets, Peretz said he wouldn't rule out any action that "makes it clear to everyone that we don't intend to allow anyone to harm Israeli citizens."
Over the last few days, the IDF's attacks inside Gaza have been pinpointed, and as long as the rockets continued to fall on Sderot, this policy would continue, officials in the Prime Minister's Office said.
The attacks on Sderot meant that the IDF was now more willing to carry out attacks that risked causing "collateral damage," they said. But, the officials said, this was a far cry from "pounding Gaza to smithereens."
The IDF, however, was considering asking the cabinet for a green light on pinpointed strikes against Hamas even if Kassam rocket attacks on Israel stopped, a top IDF officer said over the weekend.
Predicting that Kassam rocket fire would continue over the next few days, the officer said the IDF planned to continue bombing Kassam manufacturing plants, warehouses and squads, and other Hamas infrastructure involved in terrorist attacks.
Israel, the top officer said, was "not conducting a dialogue" with Hamas. The IDF operations, he said, were not necessarily dependent on the continuation of rocket attacks.
"We're not just attacking real estate," he said. "We want to make Hamas pay a price for its involvement in terrorism."
Officials in the Prime Minister's Office said the government was trying to balance between the need for a harsh response to the Kassam fire and trying to avoid "collateral damage" that could cause severe diplomatic problems.
"A delicate balance must be maintained," the official said. "We want to bring down the level of rocket attacks, but don't want to be dragged back into Gaza. It is in between those two points that we are trying to navigate. We also have to take 'the day after' into consideration."
Currently, officials in the Prime Minister's Office said, there was a great deal of international understanding for Israel's actions. The officials said the fact that Israel had "not let everything loose" had been noted abroad.
Israel was currently under no pressure, the officials said, to stop its pinpointed actions in response to the attacks on the western Negev.
Livni spoke over the weekend with leaders and her counterparts around the world, including UN Secretary-General Ban Ki-moon, and the foreign ministers of Canada, Egypt, Germany and Britain. She also briefed the foreign diplomatic corps stationed here on Friday.
Vice Premier Shimon Peres, meanwhile, is scheduled to hold a discussion at the World Economic Forum (Davos) in Amman on Sunday with Palestinian negotiator Saeb Erekat, Jordanian Foreign Minister Abdelelah Al-Khatib and Arab League Secretary-General Amr Moussa.
Livni's office gave no explanation as to why she was not going to the meeting, attended by numerous world and Arab leaders.
Meanwhile, the Kassam attacks continued Saturday, with rockets fired into the western Negev as the IDF continued to target Hamas terrorist targets in the Gaza Strip.
In the first attack on IDF ground troops in Gaza, two soldiers were lightly wounded by shrapnel when an anti-tank missile hit an armored bulldozer operating near the northern village of Beit Hanun. Both men were evacuated to Ashkelon's Barzilai Hospital.
The Givati Brigade's Reconnaissance Unit and armored forces have been operating in northern Gaza since Thursday in an effort to prevent Kassam attacks.
Two air strikes on Hamas targets on Saturday killed three Palestinians and wounded three others. In all, 23 Palestinians have been killed in IAF strikes since Israel began responding to the rocket fire on Wednesday.
AP contributed to the report.