Israeli military armored vehicles prepare to advance towards the Gaza Strip from a gathering point just outside the Gaza Strip early Monday, July 3, 2006

Soldier's captors have give Israel until Tuesday morning to begin releasing hundreds of Palestinian women and children from its prisons. Israel has rejected it, and is warning of severe consequences that could plunge the entire region into conflict.

Palestinian militants holding the kidnapped Israeli soldier have given Israel until Tuesday morning to begin releasing hundreds of Palestinian prisoners or pay the consequences. They did not specify what those would be, but Israel fears the 19-year-old Corporal, Gilad Shalit, could be tortured, or killed.

Nevertheless, Israel said it would not cave in to what it called the "blackmail of a terrorist government," led by the Islamic militant group Hamas.

"The Israeli position is clear. We believe that Gilad Shalit should be released immediately and unconditionally. Such a release, of course, would de-escalate the crisis," said Israeli spokesman Mark Regev.

Hamas spokesman Ghazi Hamad expressed sympathy for the kidnappers' demands.

Hamad told Israel Radio that the reason for the ultimatum is repeated Israeli air strikes on Gaza since the soldier was kidnapped just over a week ago. In the hours before the ultimatum, Israeli aircraft and artillery pounded militant targets across Gaza. Israel is threatening to launch a major ground assault, if the soldier is not released.

The dispute has the potential to spill over into a regional conflict. Israeli Defense Minister Amir Peretz threatened to strike at Syria.

Peretz said Syria is harboring Hamas leaders in exile, who ordered the kidnap of the soldier, and who have rejected international efforts to release him. Israel sent Syria a strong message last week, when fighter jets buzzed the palace of Syrian President Bashar Assad.