(AP)- - Israeli troops backed by tanks and helicopter gunships killed at least six Palestinian militants early Wednesday in one of the military's largest strikes since it re-entered the Gaza Strip over the summer.

The Palestinians' ruling Hamas party said an Israeli soldier also was killed in the operation to take out rockets in the northern Gaza town of Beit Hanoun. The Israeli military did not confirm the report.

Despite its large-scale action in Beit Hanoun, Israel decided on Wednesday not to expand its four-month-old military offensive in Gaza, even though Israeli Prime Minister Ehud Olmert had said earlier in the week that a broader operation was in the works.

Infantry, tanks and aircraft pummelled Beit Hanoun, which the military said was a staging ground for launching 300 rockets at Israel since the beginning of the year.
Palestinian hospital officials reported 33 wounded, including a woman and an 11-year-old boy. Nearly all of the other wounded were gunmen, they said.

Israel, which pulled out of Gaza in September, 2005, re-entered the coastal strip to try to recover a soldier captured by Hamas-linked militants in late June. The soldier remains in captivity, but the military has since broadened its objectives in Gaza to crush militants' rocket-launching capabilities.

An army spokesman said the operation on Wednesday was one of the largest in Gaza since the offensive began in late June.

The strike came as an inner cabinet of ministers, including Mr. Olmert, decided not to escalate Israel's offensive against rockets and arms smuggling operations along the so-called Philadelphi corridor, on the Egypt-Gaza border. On Monday, Mr. Olmert had told parliament's powerful Foreign Affairs and Defence Committee that the military incursion would be widened.

A senior cabinet official, speaking on condition of anonymity because he wasn't authorized to discuss policy with the press, said the ministers endorsed the more moderate approach of Defence Minister Amir Peretz.

The office of Palestinian President Mahmoud Abbas issued a statement condemning Wednesday's operation and urging the international community to take action to halt the incursion.

Hamas government spokesman Ghazi Hamad accused Israel of deliberately keeping Gaza mired in chaos to give itself “a green light in order to continue aggression against our people.” Mr. Hamad also urged the international community “to take a serious step to stop this crazy attack from the Israeli side.”

The soldier's capture and subsequent Israeli military offensive cut short nascent efforts to resume long-stalled peace talks with Mr. Abbas while bypassing Hamas, which refuses to abandon its violent campaign against Israel.

Israel's war against Lebanese Hezbollah guerrillas over the summer caused Mr. Olmert to shelve his plan to withdraw unilaterally from much of the West Bank. And the expansion of the Israeli government this week to include an ultra-hawkish party made a new peace drive unlikely any time soon.

Still, the month-long Lebanon war has re-energized international efforts to resume peacemaking in an effort to avert further conflict in the region.

On Tuesday, Mr. Peretz became the most senior Israeli public official to publicly consider a dormant Saudi land-for-peace proposal revived after the war.

“We could see the Saudi initiative as the basis for negotiation. This does not mean that we are adopting the Saudi initiative, but it can serve as a basis,” Mr. Peretz told an academic conference at Tel Aviv University on Tuesday night.

The Saudi plan calls for a comprehensive peace between Israel and the Arab world, in exchange for a complete Israeli withdrawal from lands it captured in the 1967 Mideast war.

Israel rejected a total territorial pullout, and in 2003, the Saudi initiative was overtaken by the U.S.-backed “road map” peace plan, which called for establishment of a Palestinian state that would live in peace alongside Israel.

That plan was frozen early on, however, after Israel failed to halt settlement expansion and the Palestinians refused to disarm violent groups.