Israeli PM Ehud Olmert, right, and Defense Minister Amir Peretz, left, May 25, 2006

Israel's Defense Minister says he will wait to see if Palestinian militants stop rocket attacks against targets in southern Israel before ordering further military action against targets in the Gaza Strip.

Palestinian militants continue to fire homemade rockets known as Qassam's at targets in southern Israel. Sderot, the hometown of Israel's Defense Minister Amir Peretz, is a favored target.

But Mr. Peretz, who also heads Israel's center-left Labor Party, says Israel will exercise restraint for the time being.

Peretz says Israel has the plans, means and options to use against Palestinian militants if the rocket attacks do not stop.

Israel's army commanders have reportedly asked for permission to carry out a large scale air offensive against targets in the Gaza Strip to retaliate for the attacks.

The chairman of the Israeli Parliament's Foreign Affairs and Defense committee says Israel could target leading Hamas government ministers for assassination if Hamas renews suicide bombings inside the Jewish state.

Hamas militants are behind most of the rocket attacks of recent days, calling off a 16-month truce last week after eight Palestinians were killed on a beach in Gaza during an Israeli military bombardment of a nearby area. Israel has begun an investigation into the incident.

Hamas parliamentarians met to discuss challenging Palestinian President Mahmoud Abbas' plan to hold a referendum in late July on whether to recognize Israel, something Hamas rejects.

Political science professor Ali Jarbarwi, of Bir Zeit University in the West Bank city of Ramallah, says rising tensions in the Palestinian territories benefit Hamas.

"I think that they [Hamas] are trying to use the [Israeli] retaliation and the resistance against Israel as a tool in their internal quarrels," he noted. "So if they start shooting rockets and Israel retaliates, that will inflame the situation internally and I think that would derail the referendum."

Meanwhile, Israel's Lands Administration Authority issued an advertisement for bids on 54 plots of land to be used for single-family houses near a large West Bank settlement. The bid offer was the first to be issued since Prime Minister Olmert assumed office last month.

Under the internationally-backed Roadmap Peace Plan Israel is to freeze settlement construction and Palestinians are to stop violence against Israelis, as part of an eventual comprehensive peace settlement for the region.