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Britain and the US have rejected a draft UN resolution demanding a halt to Israeli strikes at an emergency meeting of the Security Council.
It came as Gaza suffered a sixth day of violence today after hopes of the UN-backed ceasefire between Israel and Hamas foundered.
One air strike killed senior Hamas political leader, Nizar Rayyan - an outspoken advocate of suicide bombings against the Jewish state. Four others were also killed.
Hamas leader Nizar Rayyan has been killed in an Israeli airstrike. He was an outspoken advocate of suicide bombings. In this picture, taken in 2007, he can be seen during a military exercise in northern Gaza Strip
This is the first time aircraft have targeted a high-level member of the group.
Earlier, the UK and the US had refused to back the resolution because it made no mention of ended Hamas rocket attacks, which they claim started the latest hostilities.
Israel aircraft attacked around 20 Hamas targets in the Gaza Strip today as Hamas continued their bombing of the cities Beersheba, Ashdod and Ashkelon.
After ruling out a temporary ceasefire yesterday, it has said a key term of any truce would be the introduction of international monitors for the region.
Global agreement on this would allow the country to end its six-day offensive rather than launching a devastating ground invasion.
Blast: Israeli soldiers fire a mortar round towards the Gaza Strip from the Israeli side of the border with the Palestinian coastal strip on January 1
'We have no interest in a long war. We do not desire a broad campaign. We want quiet," Prime Minister Ehud Olmert told a meeting of mayors of southern Israeli cities.
'We don't want to display our might, but we will employ it if necessary.'
However, preparations for an invasion are already complete with some 2,500 reservists called up to bolster 6,500 soldiers already in position.
Military spokeswoman Major Avital Leibovich said today: 'The infantry, the artillery and the other forces are ready.
'They're around the Gaza Strip, waiting for calls to go inside.'
More than 400 Gazans have been killed and some 1,700 have been wounded since Israel embarked on its aerial campaign.
The U.N. says the death toll includes more than 60 civilians - 34 of whom are children.
Israeli deputy defence minister Matan Vilnai warned today: 'This is only the beginning. We are operating now, for exactly what we have said from the start and nothing has changed, to deal Hamas a heavy blow. It has already been wounded.'
He added that Israel would insist on an end to all rocket fire from Gaza.
Meanwhile, Hamas leader Ismail Haniyeh said Israeli attacks must stop before any truce proposals could be considered.
Israel must also lift its economic blockade of Gaza and open border crossings, he said. 'After that it will be possible to talk on all issues without any exception'.
Prime Minister Olmert yesterday rejected international calls for a 48-hour truce to allow in humanitarian aid, branding the move 'unrealistic'.
Tank crews now appear to be preparing for battle along the heavily-fortified Gaza border fence.
A few hundred yards away, Islamist militants have laid land mines and other booby traps.
Taking cover: Israelis hiding in a bomb shelter in the southern city of Ashkelon today as Hamas widened its rocket attacks beyond the Gaza Strip
At the ready: An Israeli soldier maintains a machine-gun at a staging area near the border with the Gaza Strip in southern Israel
The armed wing of Hamas broke its silence to warn that Gaza would 'burn' under the feet of Israeli soldiers.
A masked spokesman for the Izz al-Din al Qassam Brigade said: 'If you think that Hamas and al Qassam will be crushed, we will rise up from the rubble.
'If you decide to enter the Gaza Strip, the land in Gaza will burn under your feet, and it will explode under your soldiers and Gaza children will collect parts of your bodies and tanks from the streets.'
The rocket attack on the city of Beersheba, some 28 miles from Gaza, came as a shock to many Israelis.
Until yesterday, Hamas rockets had travelled no further than eight miles.
The strike in Beersheba, where a rocket hit an empty school, means some 860,000 Israelis - more than a tenth of the population - are now in range of Hamas attacks.
The militants say they have weapons which can reach targets even further away.
Rockets also hit the city of Ashkelon, slightly injuring one person, while border towns were bombarded with short-range missiles.
The attacks are likely to bolster the Israeli government's determination to maintain the assault on Gaza, despite an international outcry.
The Palestinian death toll had reached 393 last night - at least a quarter of them civilians, according to the United Nations - with 1,650 wounded, many critically.
Four Israelis have died in rocket attacks over the same period.
A land offensive would be a calculated gamble for Israeli prime minister Ehud Olmert following the devastating blow to the reputation of his forces inflicted by Hezbollah fighters in Lebanon two years ago.
But Mr Olmert, who faces an election in February, said last night: 'We didn't start this operation just to end it with rocket fire continuing as it did before.'
He offered a glimmer of hope, however, by adding : 'If conditions will ripen and we think there will be a diplomatic solution that will ensure better security in the south [of Israel], we will consider it.'
Many of yesterday's airstrikes were aimed at the network of tunnels under the Gaza-Egypt border which are used to smuggle weapons and rockets as well as food, fuel and domestic supplies.
Despite rejecting the truce proposed by France, Israel said it was doing its part to let humanitarian supplies into Gaza. Officials said more than 100 truckloads of food and medicine were scheduled to enter yesterday.
Charities around the world have launched appeals to help Gaza's 1.5million people.
Save the Children - which hopes to raise ?6.8million - warned that thousands of children faced a battle to stay alive.
On the diplomatic front, Gordon Brown once again called for a ceasefire.
As Britain pledged ?7million in emergency aid, the Prime Minister urged both sides to accept proposals being discussed by the Arab League, which he said offered 'the best way forward'.
He warned of a humanitarian crisis in the Palestinian territory.
Bereft: A Palestinian woman stands in her ruined home after Israeli strikes. Below, a huge crater where a tunnel was destroyed near the Egyptian border
Calls for an immediate ceasefire have come from the U.S., the European-Union, the UN and Russia.
George Bush and Secretary of State Condoleezza Rice have personally called leaders in the Middle East to press for a lasting solution - but President- elect Barack Obama remained silent yesterday.
The White House said Mr Bush had again raised his concern about civilian casualties in Gaza during talks with Mr Olmert.
In a show of solidarity with Palestinians, Dubai last night cancelled planned spectacular fireworks displays to mark the New Year.
Attacks: Smoke rises across the skyline after an Israeli air strike targeted a mosque in Gaza today amid fears of a ground invasion
Aid: Palestinian rescue workers survey the scene after an air strike targeted a house in Rafah in the southern Gaza Strip
