The faction members called on the government to prevent Palestinian Prime Minister Ismail Haniyeh from returning to the Palestinian Authority territories, if he leaves to Damascus or Tehran as planned.
"It is completely obvious that Haniyeh's coordination talks in Damascus and Tehran will deal with the terror activity against Israel," the faction said in a statement.
Since the ceasefire in the Gaza Strip was declared, Netanyahu refrained from publicly criticizing the government, a role which was taken by other right-wing politicians and spokespeople.
During a Likud faction meeting, the chairman criticized the ministers.
"Hamas continues to fire rockets, and if it doesn’t stop there will be tragic outcomes which we have already witnessed," Netanyahu said.
He added that "the restraint policy will lead to a dangerous situation in which Gaza will become a second Lebanon, as Hamas will be strengthened and because of the unilateral ceasefire. It is strengthening Hamas and weakening the moderates."
The Likud leader warned: "Likud's policy will be different and will work to topple the Hamas government and to launch talks with a moderate government in the Palestinian Authority based on mutuality. There is a need to carry out a consistent operation to defeat terror in Gaza, to seal the Philadelphi route and prevent arms smuggling into Gaza."
The faction meeting was held this time in an especially cynical mood. Knesset Member Michael Eitan expressed his surprise over the jobs allocated to the Ministry of Strategic Affairs.
"Now we have 20 Liebermans," he said.
MKs Danny Naveh and Limor Livnat called on Prime Minister Ehud Olmert to resign.
Olmert: Truce will eventually halt rocket fire
Earlier Monday, at the Knesset's Foreign Affairs and Defense Committee, Olmert defended the ceasefire and answered his criticizers from the Right and from the defense establishment.
"The military operation did not stop the Qassams so far," he reminded everybody, and called on them to give a diplomatic move a chance.
At the Kadima faction meeting, Olmert estimated that the truce will eventually succeed in bringing a complete secession of rocket fire into Israel, saying that the government took into consideration the possibility that the firing will be renewed.
"If the terror activity doesn't stop in contravention of commitments given to us, we have the time, ability and might to weigh our response and decide how to act," he said.
Olmert also referred to the tense situation opposite Syria , with a claming message: "If there is someone there who feels tense, he can relax. Israel will not operate against Syria as it did not operate during the Lebanon war."
Vice Premier Shimon Peres said Israel should talk with moderates in the Palestinian Authority as if there was no Hamas, and fight Hamas as if there were no moderate elements in the Authority.
"There is no chance of Hamas changing its positions. It is part of a global organization," Peres said.