Israel's Infrastructure Minister has defended Israel?s tactics in Gaza even though it has caused civilian deaths.

Speaking on Israel Radio, Binyamin Ben-Eliezer, once a former defence chief, said ?This is war. I think we have done the right thing, and will continue to do so. If there's a need for massive action, so be it.?

Ben-Eliezer justified the attacks by saying they were necessary to halt cross-border rocket salvoes by militants.

Meanwhile, the Palestinian Prime Minister, Hamas' Ismail Haniyeh referred to Tuesday's killings of the three children in Gaza as a "massacre". He said Israel, which his Islamic movement has vowed to destroy, was only fueling further hatred "through a policy that knows no laws".

Israeli military reported that it regrets civilian casualties and does everything in its power to avoid them.

"There have been many occasions on which we wanted to hit a rocket crew to prevent it firing, but resisted because we spotted innocents too close by," a senior Israeli air force officer told Reuters on condition of anonymity.

"Sometimes they launch from open fields, but sometimes they launch from the alleyways of populated areas," he said. "This is urban warfare. We didn't choose it, they did," he added.

U.N. Secretary General Kofi Annan urged Israel to "respect international law and to ensure that its actions are proportionate and do not put civilians at grave risk". He also called on the Palestinians to cease the rocket fire.