Transportation Minister Shaul Mofaz said during Sunday's weekly cabinet meeting that Jerusalem was fast becoming "a terror hub".
His remarks referred to the second bulldozer attack that had taken place in the capital, and he said the increasing terror would require "a change in policies".
Mofaz called for the demolition of homes, sealing off of areas, and the deportation of terrorists and their families, to be supported by these new policies. "We need a plan of action that will give a correct response to the threat," he said.
Regarding this issue, Vice Premier Haim Ramon said that "those who think Jerusalem's problems and terror are local, and that the destruction of houses will help, is burying his head in the sand. The real question is whether the government wants Jabel Mukaber and Sur Baher as part of the State of Israel or not."
Ramon continued, "Those who want the fence to be east of Sur Baher actually determine that Israel will live with the permanent terror unleashed by terrorists and murderers that will rise from the 175,000 Palestinians with no affinity to Israel."
He reiterated his stance about the interest of Israel to disengage from the neighborhoods and villages that have never been a part of Jerusalem. "They endanger its position as the capital of Israel and a Jewish Zionist city," he said.
Foreign Minister Tzipi Livni referred to the ceasefire in Gaza and once again called for a military response to every violation.
"Israel must respond to violations of the truce, fire for fire," she said, adding that retaliation was Israel's way of saying it will not accept fire coming from any organization. "Since Hamas is interested in the ceasefire, chances for deterioration are low," she said.
"Regarding the Rafah crossing," Livni added, " opening it will empower Hamas and so if we do it, it must be in connection with (kidnapped soldier) Gilad Shalit and the forces of (Palestinian President Mahmoud) Abbas."