In a dramatic escalation of the conflict sparked by the abduction of a 19-year-old soldier, Israeli troops rounded up senior Hamas politicians. Nasser Shaer, the Deputy Prime Minister, three other ministers and at least four members of the Palestinian Parliament in the West Bank town of Ramallah. Further arrests were reported in other towns.

Shortly before dawn today, a column of Israeli tanks advanced towards Gaza City from the north, to complement the force that entered the territory from the south on Tuesday night.

Undaunted by the show of force, the Popular Resistance Committees (PRC) in Gaza, a shadowy militant group, announced that it had killed Eliyahu Yitzhak Asheri, the 18-year old Jewsih settler kidnapped on Monday. The group also claims to hold Corporal Gilad Shalit, 19, the soldier kidnapped in a tunnel raid on Sunday. Palestinian officials said they beleived that the settler’s body had been found on the West Bank.

Mr Asheri, from the Jewish settlement of Itamar, near Nablus, was last seen by a fellow student on Sunday evening at a hitch-hiking stop in a Jerusalem suburb. However, his parents failed to realise that he was missing as he was due to return to pre-military service academy and then go hiking with friends in northern Israel.

Only after the initial reports of the abduction surfaced did his father, Yitro Asheri, check with staff at the academy in the Neveh Tzuf settlement, near Ramallah, and discover his son had not reported. The abduction was confirmed when a spokesman for the PRC produced at a press conference in Gaza a poster showing Mr Asheri’s identity card.

Mr Asheri’s mother, Miriam, appealed to his captors to release her son in a radio plea.

As the Army massed on Gaza’s borders yesterday morning, Israeli jets broke the sound barrier over the President Assad’s palace near the city of Latakia, sending a message that Syria should order Hamas to release Corporal Shalit. Syria said that it fired on the jets and forced them to flee.

“The Syrian leadership supports and harbours terrorist leaders, among them Hamas, the kidnappers of the soldier,” an Israeli army spokeswoman said. Those leaders include Khaled Mashal, the supreme Hamas leader, who lives in Damascus and was yesterday named by the Israeli Public Security Minister as a target.

“Hamas’s and Islamic Jihad’s leaders and general headquarters are in Damascus in locations the Syrians know perfectly well,” Avi Dichter said. “We have transmitted clarifications and warnings through diplomatic channels to the Syrians on this matter, but they have chosen to disregard them. This, therefore, gives Israel full permission to attack these assassins.”

He spoke as hospitals, factories and nearly 800,000 people were struggling with blackouts after Israeli F16s crippled Gaza’s only power station and blew up three bridges along the main north-south arteries.

The airstrikes and the arrival of tanks and thousands of troops in the southern town of Rafah, were designed to ratchet up pressure on Palestinian militants to return Corporal Shalit.

Ehud Olmert, the Israeli Prime Minister, threatened “extreme action” if the soldier was not freed, and last night Israeli artillery shelled the northern town of Beit Hanoun in preparation for a ground assault. A helicopter fired missiles at roads in the southern town of Khan Younis.

Mr Olmert has refused to negotiate for Corporal Shalit’s release and declared yesterday: “We won’t hesitate to carry out extreme action to bring Gilad back to his family. We do not intend to reoccupy Gaza. We do not intend to stay there. We have one objective, and that is to bring Gilad home.”

Mahmoud Abbas, the Palestinian President, called the destruction of Gaza’s civilian infrastructure a “crime against humanity”.Rafiq Maliha, a manager at Gaza’s 140-megawatt power station, was appalled by the destruction of six new transformers worth £820,000, which he said would take up to a year to replace. The plant supplied about half of Gaza’s electricity; the rest comes from Israel.

“You can’t believe the feeling we have,” Dr Maliha said.

“If you do this, you are punishing civilians. Nobody can understand the logic. Do they want to keep the people in the dark so that the kidnappers will not move around? They knew what they were targeting.”

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