Israeli Prime Minister Ehud Olmert has ordered what officials called limited military action in Gaza after renewed rocket fire by Palestinian militants.
Militants ended a truce and launched rockets on Tuesday
Mr Olmert ruled out a larger ground offensive, but said the army could carry out "pinpoint" operations against rocket-launching crews, officials said.
On Tuesday, the armed wing of the Hamas movement said a five-month truce with Israel was over.
It fired a barrage of rockets from Gaza into Israel, but no-one was injured.
The attack was in revenge for the killing of nine Palestinians by the Israeli army, Hamas said.
'All options open'
The decision came at a meeting between Mr Olmert and his defence chiefs.
In a statement, the government pledged "harsh steps" against those responsible for the rocket fire.
"The army has been ordered to continue its preparations to prevent other attacks against Israeli territory from the Gaza Strip," the statement said.
But a government spokeswoman, Miri Eisin, said that there was no large-scale action planned for Gaza.
"They didn't plan any operation. They decided to leave all options open," the Associated Press news agency quoted her as saying.
Before the meeting, Deputy Defence Minister Ephraim Sneh said that Israel was not seeking to escalate the conflict with the Palestinians.
"A wider operation will be carried out only when it is clear that the benefit is greater than the damage that will result," Mr Sneh told Army Radio.
Ghazi Hamad, spokesman for the Palestinian government, told the BBC he hoped Israel would reconsider its decision.
Efforts were being made to calm the Palestinian armed groups, and Israeli action would only complicate the situation and likely lead to further bloodshed, he said.
Meanwhile Egypt has tried to restore the Hamas truce after Tuesday's attacks.
Egyptian security officials held talks with both Hamas's Izzedine al-Qassam Brigades and the Islamic Jihad group, hoping to avert the possibility of an Israeli invasion of Gaza.
The Hamas-led Palestinian government says it is interested in maintaining the truce.