Israeli Prime Minister Ehud Olmert has said he will not conduct cease-fire talks with Hamas and has called Israel's battle against the Islamic militant group a "true war."

He told a meeting of his cabinet in Jerusalem: "Operations against terrorists will continue as they have been conducted for many months."

He continued: "There is no other way to describe what is happening in the Gaza Strip except as a true war between the Israeli army and terror groups. This war will continue."

He said a cease fire would not be reached until Hamas renounced violence, recognised Israel's right to exist and accepted past peace agreements between Israel and the Palestinians.

He also confirmed Israel would continue to supply humanitarian aid to Gaza to protect the area's civilians.

Cabinet minister Rafi Eitan enraged Palestinians by announcing plans to build an additional 740 apartments in disputed east Jerusalem and the West Bank in 2008.

When it was announced in December that 300 apartments would be built in the Har Homa neighbourhood, it upset the first round in seven years of negotiations between Israel and the Palestinians.

In addition, there are 240 apartments planned for construction in Maaleh Adumim just outside Jerusalem, one of Israel's biggest West Bank settlements.

Israeli Education Minister, Yuli Tamir, insists: "I think it is well accepted that Maaleh Edumim and Har Homa are within the sovereign territory of the State of Israel."

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