On the agenda: A gradual Israel Defense Forces operation which the cabinet members decided on last week in response to the ongoing firing of rockets by Hamas and the Palestinian factions.
Meanwhile, the preparations for a military response continue, while the weather conditions have prevented aerial activity.
Defense establishment officials estimated that Wednesday's rocket barrage was a response to the killing of three terrorists who approached the border fence on Tuesday afternoon.
"We won't accept the reality Hamas is trying to force us into," one of the ministers said before the cabinet convened.
The cabinet meeting was originally slated to discuss global Islamic terror and ways to hurt its funding chancels, but Prime Minister Ehud Olmert and Defense Minister Ehud Barak decided to change the topic for discussion after learning that the attempts to reach a new lull – which included Foreign Minister Tzipi Livni's planned visit to Egypt and the plan to allow the transfer of humanitarian aid into Gaza – have failed.
Deputy Defense Minister Matan Vilnai was scheduled to stand in for Barak at the meeting, but the defense minister eventually decided to attend the discussion in light of the situation in the south.
Earlier Wednesday, Barak ordered the defense establishment to cancel the planned transfer of humanitarian aid into the Strip.
Game of crossings
In consultations held Tuesday night between the defense minister, his deputy and security officials, it was decided to allow the equipment to enter Gaza despite the recent tensions, mostly in order to ease restrictions on the Palestinian population and signal to Hamas that renewing the lull will lead to the entry of equipment and goods into Gaza.
On Wednesday morning, however, several hours before the goods were slated to pas to the Strip through the Kerem Shalom crossing in southern Gaza and the Karni terminal in northern Gaza – Barak decided not to turn a blind eye to the massive rocket fire and to leave the crossings closed.
"We understand the importance of letting goods and humanitarian equipment into the Gaza Strip and are doing all we can in order not to harm the process," a security official said. "However, we cannot turn a blind eye as the rocket fire towards Israel continues and have therefore made a new decision this morning not to allow the goods' delivery."
Humanitarian aid has been transferred to Gaza in a limited manner over the past few weeks, but as of last Tuesday – following the ongoing rocket fire – Israel decided to close the crossings again.
Defense officials say Hamas seeks to keep the crossings open in order to avoid heavy pressure on the part of the Palestinian population.
The officials add, however, that Israel won't be able to keep the crossings closed for long, as Palestinian civilians will be the ones to suffer, and as time goes by the international pressure to open the crossings – even partially – will increase in a bid to prevent a humanitarian crisis in the Strip.
Hanan Greenberg contributed to this report