Palestinian militant group Hamas says it will uphold an unofficial truce that is on the verge of collapse amid an upsurge of violence in Gaza.
Israeli forces have been massing on the border with Gaza
Hamas said it was committed to a conditional calm but retained a right to "resistance and self-defence".
Israel has massed thousands of troops on Gaza's border and threatens to move in if Hamas launches any more attacks.
Rocket and mortar fire continued overnight, but the salvoes appeared to have diminished in intensity.
Palestinian leader Mahmoud Abbas has said his Palestinian Authority will do all it can to prevent rocket attacks being fired at Israeli targets by Hamas.
In a separate development, Israeli troops shot dead a Palestinian teenager at an army checkpoint in the southern Gaza Strip.
The boy was waiting to pass through the checkpoint when troops opened fire, Palestinian sources are quoted saying. It was not immediately clear why the shooting occurred.
After meeting with Egyptian mediators, Hamas official Saeed Seyam said the group was committed to the truce, but had the right to retaliate for Israeli violations.
"If the enemy halts its attacks, we won't have to retaliate any more, even though we are continuing to resist," Mr Seyam said.
The BBC's Alan Johnston in Gaza says on the surface there is little new in the Hamas statement, but analysts believe it may yet signal a return to the de-facto truce.
Violence has escalated in Gaza including a series of rocket attacks
Hamas has gone to the brink but it may not want to be responsible for provoking a major Israeli onslaught, our correspondent says.
Israeli Prime Minister Ariel Sharon, who has promised a "strong and harsh" response to the attacks if they do not stop, said he had told military officials "that there are to be no restraints on our operations".
Israel and Palestinian militants have blamed each other for the breakdown of a months-long truce last week.
On Sunday, several Israelis were injured by Palestinian fire on two Jewish settlements, Neve Dekalim and Gush Katif.
There have also been well over 100 Hamas rocket attacks on Israeli targets in and around Gaza in recent days.
The Israeli army said it shot dead a Palestinian man as he approached the Jewish settlement of Netzarim, just south of Gaza City.
Earlier, Israeli forces killed a local commander of the Palestinian militant group, Hamas in the town of Khan Younis. Palestinian security forces say he was targeted by an Israeli sniper operating from a settlement.
An Israeli aircraft also fired a missile at a car in the northern Gaza Strip. Witnesses said the occupants escaped, but a bystander was wounded.