Israel's defence Minister, Ehud Barak, warned yesterday that his country was engaged in "a war to the bitter end" with Hamas as a third day of fierce bombing brought the estimated Gaza death toll to 320. Two Israelis were killed in retaliatory rocket barrages last night as Hamas struck deep inside Israeli territory.

Download the new Independent Premium app Sharing the full story, not just the headlines

Mr Barak's declaration to the Knesset – the Israeli parliament – came as Israel continued its comprehensive bombardment of Hamas targets after overnight aerial attacks that devastated large parts of the Interior Ministry and the Islamic University.

Amid signs of increased international restiveness about the Palestinian death toll, Mr Barak insisted that "we have nothing against Gaza residents" but added: "We are engaged in an all-out war against Hamas and its proxies. This operation will expand and deepen as much as needed."

As Israel launched a further 20 air attacks and declared Israeli communities to the border area a "closed military zone" for the first time, Gaza militants continued to fire more than 70 rockets and mortars at southern Israel. One killed an Israeli in Ashdod – 18 miles away from Gaza – for the first time. Another Israeli was killed in the border kibbutz of Nahal Oz. After the earlier death of an Israeli Arab construction worker in a rocket attack in Ashkelon, the total of Israeli deaths since the Israeli bombardment began on Saturday is now four.

As the international outcry mounted over the scale of the Israeli crackdown, the Prime Minister's spokesman issued a robust statement, saying Gordon Brown had been "appalled" by the continuing violence in Gaza. The Foreign Secretary, David Miliband, spoke of the "unacceptable" loss of human life. European foreign ministers scheduled an emergency meeting in Paris today.

But as President George Bush continued to blame Hamas for the worst violence in Gaza in living memory, the UN secretary general, Ban Ki-moon, criticised Israel's "excessive" force and urged the international community to do more. "I think regional and international partners have not done enough. They should do more," Mr Ban said, in a rare departure from the diplomatic norm. "They should use all possible means to end the violence and encourage political dialogue, emphasising peaceful ways of resolving differences."

But with troops, tanks, armoured vehicles and reportedly artillery stationed around Gaza, Mr Barak said – even before last night's rocket barrages on Ashdod and Ashkelon: "Unless the criminal fire at Israeli citizens stops immediately, Israel will utilise all the legal means at its disposal in order to halt the enemy's aggression."

Moussa Abu Marzouk, the Damascus-based deputy head of Hamas's political bureau, ruled out a truce in current conditions. He said: "We are going to defend ourselves, defend our people and defend our land." He laid down as conditions for a ceasefire: "Stop all kinds of aggression, open all (crossings), stop all the violence against the people in the West Bank."

Meanwhile, the Israeli military said it had hit a Hamas truck carrying Grad missiles – which have a longer range than home-made Qassams – in the northern town of Jabalya. It also said it had killed a senior commander of Islamic Jihad, Ziad Abu Tir, in a strike on southern Gaza. For the first time since the bombardment began, the Israeli navy in the Mediterranean joined the attacks, hitting what the military said were Hamas vessels.

While hospitals and morgues were still full to overflowing, normal traffic was minimal, with many shops closed in populous Gaza City in the wake of a succession of strikes by F-16s, combat helicopters and pilotless drones.

The Foreign Press Association protested at the closure of the Erez crossing into Gaza, saying that the "world's media is unable to report accurately on events inside Gaza at this critical time". Journalists were also excluded from Israeli communities adjacent to the border, fuelling speculation that a ground operation could be in preparation.

As demonstrations by Palestinians were staged in several parts of the West Bank, Hamas spokesman Fawzi Barhoum urged Palestinian groups to use "all available means" against Israel, "including martyrdom operations".