Israeli forces shot dead a commander of the Palestinian militant group Hamas in the Gaza Strip this morning, witnesses and officials of the Islamic faction said.
Saeed Seyam was a Hamas commander in the southern Gaza city of Khan Younis. Witnesses said he was hit in the neck with a single shot. Hamas has a political leader by the same name.
Addressing Israel's cabinet, Prime Minister Ariel Sharon said he had instructed the army "to act without limitation to stop the strikes on Israeli communities".
Palestinian leaders said a major offensive would be disastrous for Middle East peace prospects and Israel's hopes of a smooth pullout from Gaza settlements, starting next month.
But Gaza militants defied Palestinian leader Mahmoud Abbas's call to hold fire and kept up rocket barrages. Family members and Hamas officials said a sniper shot and killed a commander of the Islamic group as he went outside to water the garden. The army confirmed it shot him.
The report came as Israeli sources said it was considering launching a ground offensive in the area to stop rocket attacks by Palestinian militants.
"We are going for a large-scale operation in Gaza," Deputy Defence Minister Zeev Boim told Israel Radio, when asked about tanks and troops that massed outside Gaza over the weekend.
"It depends on what evolves over the coming hours. It is a matter of hours. We will not tolerate this barrage," he said. A decision on an offensive was expected later.
Mr Abbaslast night urged Hamas and other militants to halt attacks on Israel and return to a truce seen as key to securing an orderly Israeli withdrawal from Gaza as planned next month.
Mr Abbas also blamed Israel for the truce's near-collapse. Israel has not launched a large-scale offensive into the Gaza Strip since the death of Palestinian leader Yasser Arafat last year raised new hopes for Middle East peacemaking.
Mr Abbas wants to avert Israeli army incursions into Gaza but has to tread carefully against Hamas, committed to destroying Israel, because of its military and political clout.
Two teenagers were killed in the past few days in gunbattles between Hamas and Palestinian police trying to prevent rocket fire, raising fears among Palestinians of civil war.