Top Hamas fugitives lobbed grenades and fired automatic weapons today to push back Palestinian security forces storming their hideout, leaving six dead in the bloodiest clash since the Palestinian president launched a crackdown on Hamas in the West Bank two years ago.

President Obama's new Middle East envoy today called for the Western-backed Palestinian government to take an active role in cementing the shaky Gaza truce.

Hamas' top political chief refused to accept Israel's demands for a ceasefire today, insisting the siege of Gaza must be lifted before his group halts rocket attacks.

Israeli ground troops and tanks cut swaths through the Gaza Strip early today, bisecting the coastal territory and surrounding its biggest city as the new phase of a devastating offensive against Hamas gained momentum.

The militant Islamic Hamas group will accept Israel's right to exist, providing the Palestinian people agree, former US president Jimmy Carter said today.

Former US President Jimmy Carter defied American and Israeli warnings today and met the exiled leader of Hamas and the militant group's deputy chief.

Reconciliation talks between rival Palestinian factions will continue tomorrow, as Hamas' top leaders seek approval for the final draft of a Yemeni-sponsored agreement, Yemen's foreign minister said tonight.

Fifty-four people, including two dozen civilians, were killed as clashes between Israeli troops and Palestinian militants escalated today.

Arab states became increasingly worried today about the worsening situation in Gaza following Israel's fuel cuts.

Israeli aircraft killed two Hamas militants in Gaza fighting early today, a day after Israel sealed the territory and bombed an empty Hamas government ministry in an intensifying campaign to halt rocket fire on Israeli border towns.

Palestinian President Mahmoud Abbas today said he hopes to reach a peace deal with Israel within a year.

Former British prime minister Tony Blair gets down to business as Mideast envoy this week.

The Israeli Cabinet today approved the release of 250 Palestinian prisoners, officials said, in the government's latest gesture of support for Palestinian President Mahmoud Abbas.

Beleaguered Palestinian president Mahmoud Abbas is considering calling presidential and legislative elections to strengthen his position, a top aide said today.

Palestinian President Mahmoud Abbas swore in a new government without Hamas and outlawed the Hamas militia, deepening the crisis between the two sides after the Islamic group seized control of Gaza in a quick military victory last week.

Hamas fighters overran one of the rival Fatah movement's most important Palestinians security installations in the Gaza Strip today.

Israel's deputy defence minister today threatened to target Hamas' political leaders, calling them "terrorists in suits" after a Hamas rocket attack killed an Israeli woman.

Israeli Prime Minister Ehud Olmert today warned that Israel would be forced to act if Palestinian militants on Gaza continue to fire rockets at Israel - though he hoped to avert a new conflict.

The rival Fatah and Hamas movements today agreed on a candidate for prime minister of their emerging coalition government in Palestine, turning to a US-educated professor to end months of infighting and help lift a painful international aid boycott.

Hamas' supreme leader today called off a ceasefire with Israel and militants threatened to attack Americans after 18 members of a family, including eight children, were killed in an Israeli artillery barrage on a densely populated neighbourhood.

Palestinian president Mahmoud Abbas travelled to Gaza today for negotiations with Hamas to put what he hoped will be the finishing touches on a national unity government made up of independent experts.

Palestinian President Mahmoud Abbas said he will dissolve the Hamas-led government within two weeks if the Islamic militant group does not agree to form a governing coalition with his Fatah Party.

With formal peacemaking a dim prospect at this volatile time, Israeli Prime Minister Ehud Olmert intends to sound out US President George Bush today about Olmert’s ambitious plan to impose a West Bank settlement on the Palestinians.

THE European Union's executive office yesterday cut off direct aid payments to the Hamas-led Palestinian government because of its refusal to renounce violence and recognise Israel, EU officials said yesterday.

ACTING Israeli Prime Minister Ehud Olmert's Kadima Party is seeking swift coalition negotiations to carry out its plan to pull out of much of the West Bank and draw Israel's borders by 2010.

ACTING Israeli Prime Minister Ehud Olmert plans to withdraw from more West Bank settlements immediately after forming Israel's next government and to set Israel's final borders within four years, a top political ally said yesterday.

The EU is expected to approve the release of around €90,000 next week to help Palestinian leader Mahmoud Abbas' caretaker administration, diplomats said today, but will postpone a decision on further aid until after Hamas takes power.

US President George Bush said today the vision of a Palestinian state cannot be realised if a Hamas-led government refuses to renounce its desire to destroy Israel.

Acting prime minister Ehud Olmert has said Israel cannot trust a Palestinian leadership in which the Islamic group Hamas has a role, his office said today.

HAMAS supporters yesterday celebrated a landslide election victory in major West Bank towns, the strongest sign yet of the Islamic militant group’s growing political appeal ahead of January 25 parliament elections.

ISRAEL vowed to hunt down Hamas leaders around the globe and to accelerate construction of its West Bank barrier after Palestinian suicide bombers blew up two buses killing 16 people.

AT least seven Palestinians were shot dead and an Israeli officer was critically wounded during heavy clashes in this northern Gaza town, while Israeli troops also carried out raids in the West Bank.

ABDEL AZIZ RANTISI, a hardliner who opposes even a temporary truce with Israel, was chosen as the new Hamas leader in Gaza last night.

THE militant group Hamas threatened revenge yesterday after Israel killed four of its members in a missile strike and declared anyone in the group a target for “liquidation.”

HAMAS said yesterday its ceasefire was over after Israel killed one of its senior political leaders in a missile strike in retaliation for a suicide bombing of a bus that killed 20 people, including six children.

TWO Palestinian teenagers blew themselves up in twin attacks on a supermarket near Tel Aviv and a Jewish settlement in the West Bank yesterday, killing two Israelis.

ISLAMIC militants have accepted a proposal to halt attacks on Israelis for three months, a senior militia official said yesterday, providing the first confirmation from the militants agreement has been reached.

DESCRIBED by Israel as the Gaza Strip's "most brilliant and brutal terrorist," Salah Shehadeh spent more than a decade in Israeli and Palestinian jails, and for the last three years was often in hiding as he oversaw Hamas' frequent attacks.

ISRAEL came under international fire yesterday after nine children were killed along with a Hamas leader in a missile strike that premier Ariel Sharon boasted was "one of our biggest successes".

A senior Hamas leader in the West Bank has died in an Israeli shell attack on the offices of the Palestinian militant group in the town of Nablus.