Israeli and Hamas officials are discussing a possible ceasefire through Egyptian mediators after Ehud Olmert,
The order was issued on Monday in response to a significant drop in the number of rockets and mortars being fired from the territory, officials said.
"We certainly appear to have entered a period of talking rather than fighting now," Al Jazeera's Jacky Rowland reported from
"For more than three days now there have been virtually no rocket attacks into
Both Israeli defense officials and Hamas leaders have insisted that no formal truce has been agreed so far, but officials in Olmert's office told said that he had ordered the army to scale back its operations to allow talks to proceed.
"It seems that Hamas has decided for now not to shoot, and we're not shooting either," said an Israeli government official.
"This could well become a ceasefire, but the ball is in Hamas' court," he said.
Ahmed Youssef, an advisor to Hamas told Al Jazeera: "We hope the Israelis will understand that the time has come to lift the sanctions."
"We would like to lay the foundations for peaceful discussions," he said.
'Period of calm'
"What we are seeing is a period of shuttling backwards and forwards to
"But the Egyptians are being very careful that they are not even in the country at the same time."
Hossam Zaki, spokesman for the Egyptian foreign ministry, confirmed that
"There is an interest on both parties in a period of calm and the issue now is to discuss whether there will be guarantees ... that the military confrontations and operation will not occur again," he told Al Jazeera.
Hamas sources told Al Jazeera that the Palestinians are not only calling for an end to the military action, but also the reopening of the Rafah crossing and the lifting of the siege on Gaza.
Zaki told Al Jazeera that the border issue was one of the top priorities for the Egyptians after thousands of Gazans poured into Sinai when
"They have their vision of how the crossing should work, they are entitled to put their vision, after all they are controlling the Gaza Strip," he said.
"But the issue of reopening the crossings is dealt with in a different concept."
Palestinian Hamas activists take part in an anti-Israel rally organized by the Hamas movement in