Jerusalem: Israel has stepped up preparations for a possible military incursion into Gaza over concerns that Palestinian infighting may lead to fresh attacks on Israel.

Such a raid was not an immediate possibility but part of a contingency plan, the Haaretz daily reported on Sunday, quoting senior military sources.

Hamas-Fatah fighting continued in Gaza on Saturday despite a new ceasefire deal. More than 80 Palestinians have been killed in the clashes.

Reacting to the report, Israeli Foreign Ministry Director-General Aharon Abramovitch said "there is no doubt we are in a difficult period".

He said Israel was watching the violence and was concerned at continued weapons smuggling into Gaza as well as sporadic rocket fire at Israel despite the truce.

"It is very important to us to be able to achieve dialogue rather than a military confrontation with the Palestinians," Abramovitch said.