Tel Aviv/Gaza City - Israel killed four Palestinian militants in an airstrike near Gaza City Sunday morning, hours after Palestinians launched rockets at Israeli border towns.

In a further indication that a five-month-old truce between Israel and the Gaza militias is fast collapsing, Israeli Premier Ehud Olmert said he has ordered the military to submit a plan to "restore full quiet to the south", and the Islamist Hamas movement, which controls the Gaza Strip, said it would "respond heavily to any Zionist offensive or attacks against our people."

The deteriorating situation on the Israel-Gaza border, where in the past 10 days Israel has killed 14 militants and Palestinians have launched around 170 rockets and mortars at the Jewish state, is expected to dominate a meeting scheduled for Monday between Olmert and Palestinian President Mahmoud Abbas, the Palestinian al-Ayyam daily said Sunday.

Olmert told ministers at Sunday's cabinet meeting that "we cannot tolerate the price that the terrorist organizations are trying to set for the prevailing situation there."

"It is our right to prevent further terrorism, threats and the breaking of the calm (truce) that is harming - first and foremost - the residents of the area," he said.

Defence Minister Ehud Barak has also threatened a ground offensive in the Gaza Strip if the rocket fire continues. On Sunday morning Israel Radio quoted him as saying that the situation in the border area was "intolerable" and could not continue.

Israel's security forces were standing ready for a strong and painful operation on the other side of the border, Barak said in a speech Saturday evening.

Foreign Minister Tzipi Livni, who is currently in the United States, said Saturday that Israel would intensify its response if the attacks resulted in any victims.

But Hamas, which Israel blames for the outbreak of violence, appeared unintimidated.

Hamas spokesman Fawzi Bahoom, warning that the movement would respond to any Israel action, told reporters Sunday that "Israeli soldiers and settlers have no right to enjoy safety and security. They should live in blood and torn-off limbs to feel what the Gaza residents feel."

Slamming ongoing peace talks between Israel and Abbas' Palestinian Authority, he added that "resistance is the only solution to restore our people's rights and principles."

A military spokesman in Tel Aviv said that in Sunday morning's strike, the Israel Air Force had targeted a group on their way to launch more rockets. The four belonged to the Popular Resistance Committees, a radical group loyal to Hamas, which controls the Gaza Strip.

Barak also ordered the crossings into the Gaza Strip kept shut, preventing goods from entering the salient, in response to the continuing rocket fire.

Two rockets launched Sunday morning landed near the village of Nir Oz, an Israeli military spokesman said. There were no reports of damage or injuries.

The truce, which came into being on June 19, began unraveling on November 5, when Israel killed five militants as it destroyed a tunnel being dug under the Gaza-Israel border, which it said had been built to facilitate the kidnapping of Israeli soldiers.

In response, Hamas and the Gaza militant groups renewed their rocket barrages on southern Israel. (dpa)