Israeli reservists were sent into action for the first time in the current Gaza conflict as the fighting continued yesterday and Palestinian deaths reportedly rose to 900.

Israeli forces were, however, holding off from a surge into the heart of Gaza City, the so-called Phase 3 in the military operations, and there were fewer air strikes, 25, compared with previous days, when they had averaged 60 to 70.

Meanwhile there were reports of a split within the Israeli cabinet with claims that Tzipi Livni, the Foreign Minister, and Ehud Barak, the Defence Minister, were pressing for an early end to the offensive while Ehud Olmert, Prime Minister, wanted it to continue.

Mr Olmert, who resigned as head of the Kadima party in September following corruption allegations, is said to be planning to present his case to a cabinet forum where he enjoys support.

Ms Livni, the Kadima candidate in the elections on 10 February, has indicated publicly that she is strongly opposed to any peace agreement involving Hamas. She is said to favour, instead, a unilateral halt to the offensive, in effect challenging Hamas to halt the rocket fire or face a renewed onslaught on Gaza.

Mr Barak, the Labour Party's candidate in the election, on the other hand, is said to prefer a ceasefire indirectly agreed with Hamas through mediation by Egyptians and is said to have been privately critical that not enough was being done at peace talks in Cairo.

Ben Caspit, one of Israel's leading newspaper commentators, reported "some sources" as claiming that Mr Olmert was seeking to prolong the war in order to postpone the elections. However, his office has denied any such claims. Caspit also suggested that a full victory over Hamas and possibly the rescue of Gilad Shalit, the Israeli soldier who was abducted in June 2006 by Hamas, might give Mr Olmert a "real historical achievement". But elections have only very exceptionally been postponed in Israeli. While there was a delay during the Yom Kippur War in 1973, there was none in the 2001 election, which took place as the intifada was nearing its peak.

Ms Livni declared yesterday that the military offensive had "restored Israel's deterrence ... Hamas now understands that when you fire on its citizens it responds by going wild – and this is a good thing."

However, she was forced to defend herself against charges that she had failed in her duty as Foreign Minister by not stopping the UN resolution demanding a ceasefire. "Anyone who has any understanding of what happens on the diplomatic field during any military operations knows that at some stage an agreement is reached similar to that one which was reached at the Security Council," she said.

Mark Regev, Mr Olmert's spokesman, claimed that Hamas's military machine was taking "serious punishment" and Israel was "advancing towards the endgame", although he refused to say when that would be.

In a sign of further tension within the Israeli establishment, Channel One television reported that a remark by General Yoav Galant, the head of the army's southern command, had been selectively leaked by political sources to imply that he was unequivocally in favour of lengthening and escalating the offensive. But his remark, that the military had a "once in a lifetime" opportunity to strike at Hamas, was accompanied by a warning that such an escalation could mean a year-long occupation of Gaza. The Israeli military declined to comment.

Meanwhile, after meeting Hosni Mubarak, the Egyptian President, the Middle East Quartet's envoy Tony Blair said elements were in place for a ceasefire agreement, but he added: "It's going to have to be worked on very hard and it's got to be credible."

Israeli officials stated that a security zone was being carved out around Gaza to prevent rockets being fired into Israel and they said the number of such attacks had been drastically reduced by the military action. Critics, however, point out that the number of rockets which came into Israel, around 12, may be fewer than in the past few days, but it had been about the same number before the Israeli offensive.

Israeli commanders also did not rule out sending troops into Gaza City. Major Avital Leibovich, the military spokeswoman, said troops were advancing into urban areas. "Since the majority of the Hamas militants are pretty much in hiding in ... urban places, we operate in those areas," she said.

'We are going wild,' says Foreign Minister

The massive destruction in Gaza is no accident, writes Ben Lynfield. Israel's Foreign Minister, Tzipi Livni, said yesterday that Israel was deliberately "going wild" in its use of military force in order to restore its deterrence capability. "We have proven to Hamas that we have changed the equation. Israel is not a country upon which you fire missiles and it does not respond. It is a country that when you fire on its citizens it responds by going wild – and this is a good thing."

But some Israeli academic specialists on Hamas are questioning the assumption that the campaign against Hamas will actually bring quiet to southern Israel. Shaul Mishal, a Tel Aviv University political scientist, voiced fears that Israel is actually creating an even more radical environment in Gaza. "One result we might see is that the Hamas leadership is so shaken, other radical elements could get into their shoes and renew terrorist activities."

Belfast Telegraph