A senior official close to Israeli Prime Minister Benjamin Netanyahu has said the country was ready for a ground invasion in Gaza, though it would prefer a diplomatic solution.
"We would prefer to see a diplomatic solution that would guarantee the peace for Israel's population in the south.
"If that is possible, then a ground operation would no longer be required," the official told Reuters.
"But if diplomacy fails, we may well have no alternative but to send in ground forces."
Meanwhile, the exiled leader of Hamas has said Israel must take the first step if it wants a truce in the conflict in Gaza.
"Whoever started the war must end it," Khaled Meshaal told a news conference in Cairo.
Mr Meshaal also said Mr Netanyahu had requested a ceasefire - an assertion the Jewish state immediately denied.
Mr Meshaal said Hamas did not want an escalation or to draw Israel into a land invasion, however he said Israel had failed to achieve its objectives in Gaza.
"The weapons of the resistance have caught the enemy off guard," he said.
Israel has bombed dozens of targets in Gaza for a sixth day as tensions between the two sides continued.
An Islamic Jihad local commander was killed in an Israeli air strike on a tower block that houses many international media, a source in the militant group said.
Locals initially thought the dead man was the owner of a computer store on the third storey of the city centre building.
Britain's Sky News and Saudi-owned Al Arabiya Channel operate out of the same building, however, most journalists left their offices immediately after an initial strike yesterday.
Meanwhile, EU foreign ministers are meeting in Brussels to discuss the deteriorating situation between Israel and Gaza.
Tánaiste and Minister for Foreign Affairs Eamon Gilmore said he is gravely concerned at the possibility that the conflict could escalate.
The Italian Foreign Minister Giulio Terzi, sounded an optimistic note saying he believes there could be a ceasefire in the next few hours.
He said from his conversations with Israeli MPs, the Israeli government had "no interest at all" in invading Gaza.
The EU High Representative for Foreign Affairs and Security Policy Cathy Ashton said she was very concerned at the loss of lives.
The Swedish foreign minister Carl Bildt felt the most important thing was to arrange an immediate ceasefire, then to look at the wider issues.
Mr Bildt said: "This is the second Gaza war in a few years. We can't wait for the third and fourth."
The push for a ceasefire between Israel and Hamas in Gaza already involves the United Nations, the Arab League and individual states such as Egypt.
The head of the United Nations called for a Middle East ceasefire, hours after an Israeli airstrike in Gaza killed 12 people, most from one family.
UN Secretary-General Ban Ki-moon urged an immediate end to the violence between the Israelis and Palestinians.
Mr Ban said he would go to the Egyptian capital, Cairo, to try to help engineer a truce.
"This must stop," he said in a statement. "I strongly urge the parties to cooperate with all efforts led by Egypt to reach an immediate ceasefire."
Israeli Foreign Minister Avigdor Lieberman said his government is willing to consider a ceasefire but only after a total halt to rocket fire on Israel, Israel Radio said.
Palestinian health officials said at least 26 Gazans were killed yesterday, including at least 14 women and children.
Israel's "Operation Pillar of Defence" has included more than 1,000 Israeli airstrikes in Gaza, while hundreds of Palestinian rockets have rained on Israel.
Israel said the bomb that wiped out ten members of a family in their Gaza home and two neighbours was aimed at a top Hamas militant, the Israeli newspaper Haaretz reported.
Israel subsequently said the Hamas militant in question, Yehya Bayaa, may have survived the attack. Hamas vowed to retaliate.
Haaretz quoted Israeli military officials as saying the wrong house was hit because of a "technical error".
Benyamin Netanyahu told reporters before his weekly cabinet meeting yesterday that Israel is prepared to escalate its military operation.
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