The security cabinet decided Wednesday not to expand the scope of the IDF's operations in Gaza despite the ongoing bombardment of Sderot and the neighboring communities.
Prime Minister Ehud Olmert ordered the army to present him with a comprehensive plan to combat the Qassam attacks on the Negev.
The ministers did not put to a vote the proposal made by several MKs to cut off Gaza's electricity or water as punitive measures against the firing of Qassams.
In a official statement issued after the security cabinet meeting the government said Israel "holds Hamas responsible for the Qassam attacks and terrorism carried out from Gaza.
"This murderous terror organization pretends to be managing the day-to-day life of Gaza's citizens while the lives of the residents of the Gaza vicinity communities are disrupted unbearably.
"Factoring in all this, we have tasked the security establishment, Foreign Affairs Ministry and relevant legal parties with outlining a plan, which will take into account all military and civilian considerations, to limit the services provided by Israel to Gaza in response to the criminal and indiscriminant attacks against the Israeli civilian population."
Defense Minister Ehud Barak said that as long as there was no defense system against the Qassam
rockets, the only solution could be deep-reaching offensive forays in Gaza.
"Alongside the offensive efforts – we must press on with developing defensive measures for the home front and prepare for the possibility of declaring an emergency situation. We must also consider imposing sanctions on the Hamas government," said Barak.