Gaza City  - Israeli ground troops fought heavy battles with Palestinian militants on Gaza City's outskirts Monday, as Foreign Minister Tzipi Livni said only Israel would decide when it would stop its offensive in Gaza and Hamas leader Ismail Haniya said the movement's fighters had an "appointment with victory."

Looking exhausted after spending all 17 days of the Israeli assault in hiding, Haniya said in a pre-recorded speech that "we are working on two parallel tracks, the first is the track of resistance and steadfastness and the second is the political track to confront the military aggression on our people."

The fighting ground on, however, and at least 10 Palestinians - among them two women, two children and a paramedic - were killed as Israel used tanks and artillery, as well as air support in the battles, which concentrated on Gaza City's southern and eastern-most neighbourhoods.

Israel also accused Hamas of violating a three-hour humanitarian truce that took effect Monday morning, allowing international organizations to pick up and distribute aid. Some 164 trucks with food, medical supplies, blankets and other items were entering though the Kerem Shalom and Karni crossings, the military said.

By late evening, Palestinian militants had fired more than 20 rockets and mortars into Israel, several of them during the humanitarian respite from 0800 to 1100 GMT.

The number of rockets appears to be dwindling, compared to the approximately 50 fired in the earlier days of the offensive.

Israel also kept up its airstrikes, carrying out more than 60 attacks. Targets included 20 smuggling tunnels on the Gaza-Egypt border, and nine squads of gunmen, a military spokeswoman said.

Targets destroyed earlier in overnight air strikes were mostly houses of Hamas activists, were rockets were stored and tunnels hidden, a spokesman said.

As the Israeli ground troops continued to encircle Gaza City, heavy gunbattles were also taking place east of Khan Younis, in the south and east of Jabaliya and Beit Lahiya, in the north, Palestinian witnesses told local radio stations.

The Israeli ground troops, who since Sunday for the first time included reserve soldiers, have so far avoided pushing deeper into populated areas, where Hamas is believed to have a strategic advantage. But they are making "limited" advances, witnesses said.

Both the armed wings of Hamas and the Islamic Jihad faction claimed in separate statements sent to journalists that they had managed to "block" Israeli advances deeper into southern and eastern Gaza City.

But the Israeli military said it was at this stage not trying to penetrate densely populated areas.

The Palestinian toll on day 17 of Israel's Gaza offensive stands at 905 killed and 4,100 injured, said Gaza emergency services chief Mo'aweya Hassanein. Thirteen Israelis have been killed and dozens injured.

Israel launched the offensive in a bid to end more than seven years of rocket and mortar attacks from Gaza at its southern towns and villages.

According to figures from the Israeli Defence Ministry, about 400 of the dead are members of Hamas' armed wing and security forces. It said that as the offensive was in its third week, a total of 2,200 targets throughout Gaza have been hit, among them some 260 smuggling tunnels.

Palestinian militants fired more than 642 rockets into Israel during that time, some 90 of them imported, Russian-type Grads.

Livni maintained the Gaza offensive had hurt Hamas' ability to fire rockets into Israel and "changed the equation" between Israel and the radical Islamic movement ruling Gaza.

It had also restored Israel's "deterrence" against militant factions seeking to attack it - Hamas now understands that Israel will act "wildly" to any such attacks against it, she said.

"I don't accept that in a war against terror the UN decides when to stop," the defiant Israeli foreign minister told Israel Radio Monday morning.

She insisted that according to her estimate, the international community was not expecting Israel to implement Thursday's UN security council ceasefire resolution "immediately."

Israel, she said, was now acting to prevent Hamas from stocking up on new long-range rockets and wanted both Egyptian and international assistance in stopping weapons-smuggling to Gaza, which she said had to be blocked "also beyond Egypt."

"One has to understand it begins in Iran," she said.

Caretaker Prime Minister Ehud Olmert said he hoped to see a quick end to the offensive, but stressed it would go on until Hamas completely ceased its rocket fire and until smuggling tunnels were decimated. We are "closer than in the past" to achieving quiet in southern Israel and to ending weapons smuggling into Gaza, he told students at a French school just south-east of Tel Aviv.

He added Israel was not at war with the people of Gaza and "apologized" for every innocent child or adult killed in the strip. (dpa)