Prime Minister Ehud Olmert has warned that Israel's offensive in Gaza to free a captured soldier and stop rocket fire could continue indefinitely.
Israel's military remains in the east and south of Gaza
"This is a war that cannot be on a timetable," Mr Olmert is quoted as telling Israel's cabinet.
Israel pressed on with air strikes on Sunday, wounding several Palestinians, including militants and civilians.
Scores of Palestinians have died in the two-week old campaign, which has also battered Gaza's infrastructure.
Most of the dead have been militants, although civilians have also been killed.
In the latest violence, Israel fired missiles at a car carrying Hamas militants near Gaza City on Sunday night, wounding five people.
The vehicle, which was carrying explosives, then blew up.
A second attack targeted a building which the Israeli military said was used as a weapons depot by the militant group Islamic Jihad.
Earlier, Palestinian sources said a bystander died and several others were hurt in an air strike which Israel said was aimed at militants in the town of Rafah in southern Gaza.
At least three militants were also wounded in an Israeli air strike near the Karni border crossing, Palestinian sources said, while at least one Israeli was injured in one of two Palestinian rocket strikes on Israel.
Mr Olmert told ministers Israel's offensive would continue for as long as it took to secure the release of 19-year-old Gilad Shalit and stop cross-border rocket attacks.
"There is no intention to reoccupy Gaza in order to stay there, but if certain operations are needed they will be carried out.
"We will operate, enter and pull out as needed," he was quoted as saying.
Israeli forces withdrew from northern Gaza on Saturday, but remain east of Gaza City and in the south of the Strip.
Israel's southern region commander meanwhile hinted that Israel's operations could continue for weeks.
"They [Palestinian militants] will think twice before launching attacks when they see in a week, a month or two months from now that hundreds of terrorists have been killed," said General Yoav Galant.
On Sunday the Israeli army disclosed that a Israeli soldier shot dead in northern Gaza on 28 June was killed by friendly fire.
Staff Sergeant Yehuda Bassel, Israel's only military fatality since the start of the Gaza offensive, was initially suspected to have been shot by a Palestinian sniper.
On Saturday, UN Secretary-General Kofi Annan demanded that Israel take urgent action to prevent a humanitarian disaster in the Gaza Strip.
Mr Annan's statement was his second in as many days about the situation in Gaza.
The BBC's Richard Galpin at the UN in New York says Mr Annan is clearly becoming increasingly alarmed by what is happening and is becoming increasingly blunt in his statements.
In a separate statement, UN agencies including the World Health Organization, Unicef and the World Food Programme said Gaza was on the brink of a public health disaster.