Israel has rejected criticism that its military offensive in the Gaza Strip is a disproportionate use of force.
Israeli raids against the Gaza Strip continued overnight
PM Ehud Olmert said there was no other way to stop "the fear, the shocks, the lack of security" of Israeli civilians facing daily rocket attacks from Gaza.
Seven Palestinians have been killed in the latest series of air strikes.
More than 40 Palestinians and an Israeli have been killed in raids launched after militants seized an Israeli soldier.
An exiled militant leader called Cpl Gilad Shalit a prisoner of war who must be swapped for Palestinian detainees.
"We are for a peaceful, quiet resolution. The solution is simple: an exchange, but Israel rejects that," Khaled Meshaal, Hamas's political leader, said at a news conference.
It was his first public appearance since Cpl Shalit's capture on 25 June.
Israeli officials blame the Damascus-based Mr Meshaal for masterminding the abduction and have threatened him with assassination.
"They talk about one soldier, we have 10,000 detainees [in Israeli jails], including 400 children and 120 women... this is why we are seeking a prisoner exchange," Mr Meshaal said.
There are conflicting accounts surrounding the deaths of three teenagers in one of the latest Israeli air attacks on Gaza.
Palestinian sources say the trio killed on the outskirts of the northern town of Beit Hanoun were innocent bystanders, but the Israelis say they were militants who had launched a rocket into Israel.
The BBC's Alan Johnston in Gaza says the fact that that no militant group has come forward to claim the latest victims suggests they were civilians.
Earlier two people - both militants - died in an attack on a car, while an unidentified man was killed in another attack on a car in the Shejaya area of Gaza.
Separately, a 15-month-old baby wounded in an Israeli air strike near Khan Younis on 21 June died on Monday of his injuries, medical sources said.
On Sunday, Mr Olmert told ministers the offensive was not a re-occupation of Gaza, but would continue for as long as it took to secure the release of 19-year-old Cpl Shalit.
The European Union has condemned "the loss of lives caused by disproportionate use of force by the Israeli Defence Forces and the humanitarian crisis it has aggravated".
But Mr Olmert said: "When was the last time that the European Union condemned this shooting and suggested effective measures to stop it? We were waiting and waiting and waiting."
Israeli forces have withdrawn from parts of northern Gaza they seized last week, but they remain east of Gaza City and in the south of the Gaza Strip.
Hamas says Cpl Shalit is alive and being well-treated, and it is demanding Israel release women and children among the 9,000 Palestinians held in Israeli jails.
Mr Olmert ruled out any negotiations with the Hamas-led Palestinian government, calling the militant group a "terrorist bloody organisation".
But he also denied trying to topple the democratically elected Palestinian government.
Israel withdrew settlers and the troops who protected them from Gaza last September after a 38-year presence.
Since then Palestinian militants have frequently launched home-made Qassam missiles at Israeli population centres - often without causing injuries. The attacks are usually described as revenge for Israeli military action.