As Gaza filled with funeral cortèges yesterday, Israeli airstrikes blew up the offices of Hamas’s leader in the Gaza Strip and troops battled with Hamas gunmen in the territory’s cramped streets.

The launch of the Israeli onslaught proved to be one of the bloodiest days in the seven-year intifada. Another seven Palestinians were killed in battles around Jabaliya in the northern Gaza Strip and in airstrikes that blew up rocket squads but failed to end the daily barrages of missiles hitting Israel’s southern towns.

“This morning I carried two children, one a 10-year-old and the other a 13-year-old, after they were wounded by an Israeli missile,” said Hussein Oun, a Palestinian resident of Jabaliya. “They were among a group of seven children standing near a fighter when the shell hit. Two of the children were wounded. I don’t know what happened to the other five.”

With fighting raging in Gaza and deadly riots erupting across the West Bank, Mahmoud Abbas, the Palestinian President, suspended talks with Israel, a move that could bury already slim hopes for a renewed peace process. Hamas called for renewed talks with Fatah’s West Bank administration to forge national unity after a brief civil war in Gaza last year left Hamas the rulers of the strip.

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Hamas’s leaders appear to be trying to emulate Hezbollah, withstanding an Israeli onslaught while still continuing to fire rockets

James Hider, Middle East Correspondent

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Condoleezza Rice, the US Secretary of State, is due to arrive tomorrow to try to salvage what little remains of the peace process.

Israeli leaders said that the operation would go on until Hamas ended its rocket fire, which in the past week killed one Israeli and wounded dozens more. They accused Hamas of storing its rockets in the basements of residential buildings and said that the high civilian casualty — about half of the total 70 or so deaths in less than two days — was on their heads.

Among the dead were several children and a 21-month-old baby. Two Israeli soldiers were also killed in heavy fighting with Hamas gunmen. Hamas leaders are in hiding, and the air raid on the offices of Ismail Haniya missed the former Hamas Prime Minister.

Ban Ki Moon, the UN Secretary-General, condemned what he called Israel’s “disproportionate use of force” but his comments drew an angry snub from Ehud Olmert, the Israeli Prime Minister. “Nothing will prevent us from continuing operations to protect our citizens,” he said.

Ehud Barak, the Israeli Defence Minister, said that his forces could even increase their operations in Gaza into a full-scale invasion to “weaken the Hamas rule, in the right circumstances, even to bring it down”. A senior Israeli security source said that the escalation was triggered on Wednesday when an airstrike killed five top Hamas militants who had been training in Iran and Syria. He said the men were planning to infiltrate Israel and attack either an army base or civilian community.

Hamas launched a blistering barrage of rockets in retribution for the killings, even firing Iranian-made Grad missiles, with a 12-mile range, at the southern city of Ashkelon, the source said. Israel had no other option than to storm in and wipe out the rocket teams, the security source said.

“Nobody likes it, nobody thinks it’s a genius idea, but so far we don’t see any other alternative,” he said. Asked if the operation was aimed at fully reoccupying Gaza, which Israel left in 2005, he said: “Not yet.” Preparations for a full-scale takeover of Gaza have been finalised, military officials said.

Riots broke out in West Bank cities, with Palestinians protesting against the Gaza death toll. In Hebron one person died and a dozen were injured in clashes with Israeli security forces.

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