The Israeli justice minister has infuriated cabinet colleagues by saying the army offensive in Gaza reminded him of his family's woes in World War II.
Lapid's Shinui party is the prime minister's main coalition partner
Yosef Lapid said a TV picture of an elderly Palestinian woman in the rubble reminded him of his grandmother.
Prime Minister Ariel Sharon reprimanded Mr Lapid, who denied he was drawing comparisons with the Holocaust.
Mr Sharon said he would put his new plan for a staged withdrawal from Gaza before the cabinet this month.
"I intend to present my disengagement plan to the cabinet in a week and get it approved," Mr Sharon said.
Israeli troops have demolished dozens of homes in the Rafah refugee camp.
In an interview with Israel Defence Forces radio, Mr Lapid revealed that the army was considering demolishing another 2,000 homes in Rafah to widen the so-called Philadelphi road on the border with Egypt.
Referring to the TV picture, Mr Lapid said he was "talking about an old woman
crouching on all fours, searching for her medicines in the ruins of her house and that she made me think of my grandmother".
The UN estimates at least 1,600 people have lost their homes
"I said that if we carry on like this, we will be expelled from the United Nations and those responsible will stand trial at The Hague," Mr Lapid told Israel radio, describing his argument in cabinet.
Mr Lapid, leader of the centrist Shinui party, spent part of World War II in a Budapest ghetto and lost many members of his family in the Holocaust, including a grandmother who died at Auschwitz.
He stressed that in his comment on the Rafah offensive, he was "not talking about Germany or the Nazis".
Israeli political sources quoted by Reuters said Prime Minister Sharon scolded Mr Lapid at the cabinet meeting, denouncing his remarks as "unacceptable and intolerable".
And Health Minister Danny Naveh of Mr Sharon's right-wing Likud party, said Mr Lapid "can argue about demolishing houses... but you can't draw these kinds of analogies".
Using the Nazi genocide of the Jews in political debate is considered taboo by many Israelis, who see it as cheapening the memory of the Holocaust victims, correspondents say.
On Friday, Israeli forces pulled out of parts of Rafah after three days of fighting and occupation, in which more than 40 Palestinians were killed.
The policy of demolishing Palestinian houses has been widely condemned.
Israel says it is trying to secure the border with Egypt to prevent arms being smuggled into the Gaza Strip.
Mr Sharon says he wants to pull Israeli troops and settlers out of the Gaza Strip altogether.
After his initial proposals were rejected by hardliners in his own Likud party, he drew up an amended plan, which he will present to his cabinet this month.
The new plan reportedly calls for a withdrawal from the
Gaza Strip and four West Bank settlements in stages,
instead of all at once.
In addition, the homes of the Jewish settlers would be destroyed in the pull-out, Israeli media reported.