Israel says it will press on with its military offensive in the Gaza Strip, as Hamas vows to do the same.  Hostilities are now into their third week with Gaza medical sources reporting over 860 Palestinians killed, about half of them civilians. Thirteen Israelis have been killed in that time span, including three civilians killed by Hamas rocket fire.

An Israeli woman, suffering from shock, is helped by a soldier after a rocket fired from the Gaza Strip hit the southern town of Sderot, Sunday, 11 Jan. 2009

Going into Sunday's weekly cabinet meeting, Israeli Prime Minister Ehud Olmert said the military has made important gains against Hamas in Gaza, but would have to fight on to fully achieve its aims.

Mr. Olmert also rejected the U.N. resolution that calls for an immediate cease-fire, saying only Israel could decide how best to protect its citizens.

Israel says it will halt its offensive only if Hamas halts all rocket fire into Israel and the group is unable to re-arm.

Hamas has shown similar defiance. Its leader, Khaled Meshaal, called Israel's Gaza offensive a "holocaust" that has sparked armed resistance in every house and every place.

Palestinian boys walk past destroyed building in al-Zeitun neighborhood following Israeli strikes in Gaza City, 10 Jan 2009

Speaking from his exile in Damascus, Meshaal said Israel tried to destroy the resistance. But, he vowed instead, he said no one will believe Israel if it says it wants peace.  

Meshaal again outlined Hamas demands for a cease-fire - including the withdrawal of all Israeli forces and the opening of Gaza's borders and an end to Israel's siege of the territory.

In Gaza, the offensive continues. The Israeli military says its war planes struck at over 60 targets overnight, all linked to militant activity, it says.

Witnesses in Gaza also reported fierce fighting between Israeli troops and militants in a neighborhood of Gaza City early Sunday.

The U.S.-based group Human Rights Watch accused Israel of unlawful use of white phosphorus shells. The chemical is used to create smoke and mask the movements of ground forces.

Weapons fired by Israeli forces explode over Gaza as seen from the Israel-Gaza border, Saturday, 10 Jan. 2009

Human Rights Watch notes such uses are allowed under international law, but  says it can cause fires and severe burns, and its use in densely populated areas contravenes international humanitarian law. Israel denies it is using any unlawful weapons.

Hamas rocket barrages have diminished in recent days, but militants are continuing to fire rockets into southern Israel, including on Sunday.

At the same time diplomatic efforts to end the fighting continue, with Egypt having taken the lead in trying to negotiate a cease-fire.