Hamas and its leaders are the main target of Israel's "war on terrorism," Defense Minister Shaul Mofaz said on Sunday, a day after one of the group's founding members was killed in an Israeli missile strike in the Gaza Strip . Hamas said it would avenge the killing of Ibrahim Makadmeh, 51, a leader of the group's military wing, by targeting Israeli political leaders.

Makadmeh was the most senior Hamas member to be killed in 29 months of violence. Three of Makadmeh's bodyguards were also killed in the strike.

Israel's three-week-old offensive against Hamas in Gaza is its most sustained effort yet to subdue the Islamic resistance group, which has killed hundreds of Israelis. However, Israel has been reluctant to reoccupy the crowded strip for logistical reasons, and may find it difficult to defeat Hamas, which has widespread support in Gaza.

The PLO's Central Council, meanwhile, continued talks Sunday after it approved a request Saturday by Palestinian leader Yasser Arafat  to establish the position of prime minister, a condition set by the United States as a precursor to the renewal of peace talks.

The council approved Arafat's nomination of Mahmoud Abbas, better known as Abu Mazen, as prime minister, caving to international and domestic pressure to name someone with political clout. The Palestinian legislature is to meet Monday to decide on the prime minister's authority.

Israel has said it will not renew peace talks with the Palestinians until a new leadership is named, and has refused to hold negotiations with Arafat.

Mofaz, who called Makadmeh an "arch-terrorist," said he welcomed the Palestinian move to reform their leadership but said Israel would continue to target all Palestinians involved in attacks on Israelis.

"The test is simple: Involvement in terror," Mofaz told Israel's Occupation army Radio. "None of the heads of terrorism, with an emphasis on the Hamas, is immune and Israel will put its hands on everyone that is involved in terror, anyone who dispatches terrorists with the goal of killing innocent Israelis."

Despite Israel's recent military strikes in Gaza - including the reoccupation of a four-square-mile area meant to stop Hamas from firing Qassam rockets - Hamas launched four more of the crude projectiles Sunday. The rockets fell in the Israeli border town of Sderot.

In one of the areas retaken by Israel, the town of Beit Lahiya in northern Gaza, a stone-throwing youth was shot in the head by occupation troops and was in critical condition, hospital officials said.

Mahmoud Zahar, a Hamas leader, made new threats against Israel on Sunday, at a rally at Gaza City's Islamic University. "By assassinating Ibrahim Makadmeh, they opened a new gate to violence," Zahar said. "Those who are well known have well known addresses, whether they are official or non-official."

Israel stepped up its war on Hamas in mid-February after the group claimed responsibility for blowing up an Israeli tank in the Gaza Strip, killing four occupation soldiers. Israeli raids into Hamas strongholds in the Gaza Strip followed. Last week, Israel arrested another of the group's founders, Mohammed Taha, and his son, Ayman, a leader of the Hamas military wing.

Last Wednesday, a Hamas resistance bomber blew himself up on a bus in Haifa, killing 15 Israelis and one American. On Friday, two Hamas gunmen attacked the Jewish settlement of Kiryat Arba, killing an American rabbi and his wife during Sabbath dinner. The gunmen were killed.

Prime Minister Ariel Sharon  told his Cabinet that Hamas posed a global threat. "The murderous terror attacks - murders after murders - prove to us who we are facing," Sharon said Sunday. "The regional and global terror is a danger to Israel and to the entire world."

As the standoff between Hamas and Israel intensifies, the question remains how much power a new Palestinian prime minister will have and whether he will be able to revive peace talks.

"This is a critical week in the soul-searching being done among the Palestinians, with an emphasis on choosing a leadership - meaning the appointment of a prime minister - who will lead the Palestinians in a different direction," Mofaz said.

Abbas, 67, is the most outspoken critic of the armed Palestinian uprising, and a veteran peace negotiator.

In Hebron, Israel blew up the homes of the two Hamas gunmen who carried out the attack on Kiryat Arba. It also demolished the home of the Haifa resistance bomber.

Israel has a policy of demolishing the homes of activists and resistance bombers in to deter Palestinians from attacking Israelis. Palestinians condemn the acts as collective punishment and a violation of international law.

In Kabatiya village near Jenin, Israel blew up the home of Mohammed Abu Roub, a senior military wing leader of the Islamic Jihad, who was arrested by Israeli occupation troops on Friday.

PHOTO CAPTION

Israeli Prime Minister Ariel Sharon  listens to discussions at the start of the weekly meeting in his Jerusalem office Sunday March 9, 2003. The resistance Islamic group Hamas has threatened to exact revenge against Israeli politicians after Israeli helicopter gunships killed Hamas leader Ibrahim Makadmeh in Gaza on Saturday. (AP Photo/POOL, David Silverma