Israel killed a top Hamas commander on Thursday in the biggest blow yet against the Islamist leadership as dozens more air strikes on Gaza took the death toll from the six-day blitz to more than 400.
With tanks and troops massed around the Palestinian enclave for a threatened ground offensive, Hamas sent more rockets deep into Israeli territory as Israeli warplanes and naval artillery staged more than 50 new attacks on Gaza.
Two Israeli fighter jets swooped on the home of Nizar Rayan in the Jabaliya refugee camp, killing the hardline Hamas cleric, his four wives and two daughters, aged seven and 10, and a son, witnesses and medical sources said.
Rayan's decapitated body was hurled into the street by the force of the blast which also destroyed 12 nearby houses.
He was the most senior Hamas figure to be killed by Israel since Abdel Aziz al-Rantissi in 2004. The firebrand orator had lambasted Palestinian President Mahmoud Abbas and called for suicide attacks on Israel during televised speeches and at rallies.
"Operation Cast Lead" has now left 414 Palestinians dead and more than 2100 wounded, Palestinian emergency services say. Rockets fired from Gaza have killed four people and wounded dozens in Israel.
The new Israeli strikes also hit the Parliament and Justice Ministry in the main Hamas government complex as well as rocket-launching sites, tunnels used to smuggle weapons and supplies into the territory and weapons storage facilities, a military spokeswoman said.
Hundreds of houses have been destroyed and the United Nations says scores of the dead are civilians. Food, fuel and medical supplies are all running short, aid agencies say.
Israel started the strikes on Saturday in response to rocket fire by Hamas and its militant allies.
It has demanded the rocket fire stop as a condition for a ceasefire but more than 40 were fired on Thursday, without causing new casualties, the military said.
One missile slammed into an apartment block in Ashdod more than 30 kilometres from the Gaza border, the army said, adding that a warplane attacked the squad that launched the missile.
Two rockets fell near the desert city of Beersheva, 40 kilometres from the border - the deepest yet they have reached inside Israel.
Speaking in Beersheva, Prime Minister Ehud Olmert said Israel was "not interested in conducting a long war" but instead that "we will deal with Hamas and terror with an iron fist".