Israeli Defence Minister Shaul Mofaz has said the withdrawal of Jewish settlers from Gaza will allow Israel to extend its borders into the West Bank.
Many Jewish settlers say they will resist the disengagement plan
He also said the pullout would enable Israel to maintain Jerusalem as the unified capital of a Jewish state.
Mr Mofaz warned that destroying the settlers' home in the Gaza Strip after evacuation was unnecessary and could endanger the lives of soldiers.
Palestinian officials want Israel to raze the settlements before leaving.
They say the suburban-style, detached houses with gardens - which take up about 20% of the Gaza Strip - are unsuitable for the overcrowded territory, which is home to 1.3m Palestinians.
About 8,500 Jewish settlers and the soldiers who guard them are to leave Gaza and parts of the West Bank as part of Israeli Prime Minister Ariel Sharon's unilateral disengagement plan.
Israel will continue to control Gaza's external borders, coastline and airspace.
Mr Mofaz said the pullout would allow Israel to keep hold of its large West Bank settlements - which are viewed as illegal under international law - extending its future borders deep into Palestinian territory.
"In fact, the settlers of [the West Bank] and Gaza will be able to say in years to come that they helped establish the eastern frontiers of the state of Israel," he told the Israeli newspaper Yediot Ahronot.
Speaking on Memorial Day when Israelis remember fallen soldiers, he repeated his opposition to the demolition of the settlers' homes.
"After we evacuate the settlers we would have to maintain military forces, security guards and forces to destroy the houses in the middle of enemy territory and there is no assurance that there wouldn't be terror attacks," he said.
The defence ministry has estimated it could take months and cost millions of dollars to destroy the houses and remove the rubble.
Chief Palestinian negotiator Saeb Erakat strongly denounced the statements by Mr Mofaz, Voice of Palestine radio reported.
He said he "believed the statements were in line with the Israeli practices that seek to abolish negotiations and replace them with dictates", the radio reported.
Mr Mofaz also revealed he has decided to reduce the length of mandatory military service for Israelis.
The length of service is set be cut by between five and seven months.
Israeli men over the age of 18 currently serve three years in the army whilst women serve two-and-a-half.