In a press conference in Tel Aviv on Saturday, Netanyahu said the Israeli army "will act and continue to act" according to the country's security needs, adding that Hamas will pay "intolerable price" should there be more attacks.
He also vowed to find the missing Israeli soldier 2nd Lt. Hadar Goldin, saying "it does not matter how much time" is needed.
"Israel will continue to make every effort to bring its missing sons home," he pledged in remarks made just after the missing soldier's mother made an appeal demanding there be no troop withdrawal until her son is found.
Netanyahu's latest statement contradicted earlier reports that some of the Israeli military operation will be winding down in the coming days.
In response, Hamas said it will continue its fight until its demands are met by Israeli.
"We will continue our resistance till we achieve our goals," Hamas spokesman Fawzi Barhum told AFP news agency.
Earlier on Saturday, Israeli military told residents of Beit Lahiya that they could now return to their homes.
Al Jazeera's Nicole Johnston also reported seeing tanks pulling out, but added that "it is difficult" to determine scale of the withdrawal.
But she added that so far many residents have refused to follow the advise out of fear for their lives.
"People are saying to us, at this stage they are not returning home. They don't trust Israel. No one feels safe enough to return home at this stage," she said, adding that shelling can still be heard on late on Saturday.
A diplomatic solution also appears unlikely to end the crisis as Israel announced earlier on Saturday that it would not attend the talks set in Cairo.
Death toll still rising
Meanwhile, bombardments continued across the Palestinian territory including the southern district of Rafah on Saturday afternoon, Al Jazeera's Imtiaz Tyab, reporting from Gaza, said. The targets included a major mosque and a university.
As of late Saturday, Gaza health ministry officials reported that the death toll has now risen to 1,677 Palestinians, and our correspondent said that the number could rise further.
"We have seen a lot of fighting there with over 120 people killed in a 24-hour period, and we have on good authority that that number is much higher, but the reason it has not been updated is that nobody could get into Rafah," he said.
Among those who were killed 378 are children, 86 are women and 58 are elderly men. There were also 63 Israeli soldiers killed as well as three civilians in the Israeli side.
Aside from the Islamic University, one of Gaza City's largest mosques, Shifa mosque, was also badly damaged by an Israeli strike.
"Over the past several days, it's becoming very clear that there are no red lines," he said. "At least six hospitals have been targeted, and we know that UN schools where people were sheltering, have been targeted."
Israeli forces on Saturday sealed off the eastern Rafah area, and warned that cars on the streets would be considered potential targets, Al Jazeera’s Charles Stratford, reporting from southern Gaza, said.
PHOTO CAPTION
Sun sets over northern Gaza Strip as seen from the Israeli border August 2, 2014.
Al-Jazeera