"Israel has no interest in an escalation in Gaza, but we will not be able to ignore the continuation of Qassam fire and infiltration attempts by terror groups," Olmert told the cabinet.
Olmert added Israel sent warnings to the Palestinians through international mediators that the Jewish State might have to launch ground incursions in Gaza in order to protect southern cities from the threat of rocket attacks.
IDF Chief of Staff Lt-Gen Gabi Ashkenazi and Shin Bet chief Yuval Diskin will brief ministers at Sunday's cabinet meeting on the security situation in the Gaza Strip.
Ministers will also discuss plans to increase transit activities at the Kerem Hashalom border crossing between the Gaza Strip and Egypt and to expand air traffic with Egypt and Jordan.
Palestinian gunmen fire makeshift Qassam rockets at Israeli towns and kibbutzim almost daily.
Three Hamas gunmen were killed by the army on Saturday in the Gaza Strip as they attempted to place explosive devices along the border with Israel.