Israeli Defense Minister Ehud Barak threatened tough retaliation Sunday after two young brothers were badly wounded in a Palestinian rocket attack on a traumatized Israeli town. Four Israeli airstrikes after the attack killed a Gaza gunman and targeted weapons-making operations of the territory's ruling militant Hamas group.

The ongoing rocket barrages and Israeli military attacks threaten to scuttle U.S.-backed efforts to prod Israel and the Palestinians toward a final peace agreement by the end of the year. Israel has warned it would not implement any peace deal if the violence continues.

The assaults on southern Israel were ratcheting up the public pressure on Israeli Prime Minister Ehud Olmert's government to strike harder against Palestinian militants in Gaza, both militarily and economically. Several senior officials want Israel to cut all ties to Gaza, whose economy is heavily reliant on Israel. Others insist the solution is a stepped-up military campaign against the militants, including assassinating Hamas political leaders.

On Sunday, Barak visited the scene of the attack on the rocket-scarred town of Sderot that injured the brothers, ages 8 and 19, the night before.

"We will continue to attack with all available means," Barak said."We will continue to operate until we find a solution to the rockets."

But angry residents, who want a large-scale military assault on Gaza militants, accused the defense minister of neglecting them.

"Go home. Why did you bother coming?" one resident shouted.

Gaza was to be the focus of Sunday's regularly scheduled Cabinet meeting. Army Radio reported that Olmert had no immediate plans to launch a broad military campaign in the tiny seaside territory, home to 1.4 million people, but to continue pinpoint attacks.

The rocket that wounded the brothers was one of 11 fired toward southern Israel on Saturday, police said. It landed meters (yards) from them as they and other family members ran down a road, seeking shelter after sirens announced an incoming rocket attack, Israeli media reported.

A medic, who only gave his first name, Gil, said he heard a loud explosion and rushed toward the scene.

"I found two injured people, one boy very seriously wounded in the legs," the medic told Israel Army Radio. The hospital where the brothers were treated said Sunday it was forced to amputate the leg of the younger brother, which was partially severed in the explosion. Doctors told Israel TV that the same boy was also hit in the chest by shrapnel. The 19-year-old's condition improved overnight, Barzilai Hospital in the southern town of Ashkelon reported.

Their mother and a third brother were brought to the hospital suffering shock, medics told Channel Two TV.

The Islamic Jihad and Hamas-allied Popular Resistance Commitees groups claimed to have fired rockets toward Sderot around the time of the attack.

"Israel will take resolute and decisive measures to protect our citizens," government spokesman David Baker said Saturday night. "We will not allow Israeli families to be victimized by Palestinian rockets in the heart of their own cities."

Overnight, Israeli aircraft launched missiles at a car carrying Palestinian militants, killing one.Three attacks that followed overnight struck a militant outpost, weapons factory and a weapons warehouse, all belonging to Hamas, the military said Sunday.

Eighteen Palestinians, all militants except for one, were killed last week in Israeli strikes on the Gaza Strip.

National Infrastructures Minister Binyamin Ben-Eliezer, a former defense minister, advocated severing all ties with Gaza, which relies on Israel for fuel, electricity and access to humanitarian aid.

"They are pressing us to reoccupy Gaza, but we're not interested in doing that, so we will impose economic sanctions," Ben-Eliezer told Army Radio on Sunday. "I very much support additional steps that will bring about a total cutoff from Gaza."

The Israeli army and government have been reluctant to launch a large military campaign for fear dozens of soldiers and Palestinian civilians would be killed. But public pressure was growing.

On Saturday night in Sderot, residents burned tires at a major intersection, blocking roads. They demanded a military campaign in Gaza.

The rockets fall almost daily in southern Israel, severely disrupting daily life and creating panic in the area. Twelve Israelis have been killed by rockets in the past seven years.

The barrages have not abated despite Israel's withdrawal from the territory in 2005, military strikes and an economic blockade of the territory in recent months, including a cutback in supplies of fuel and electricity through crossings Israel still controls.

On Thursday, Israel cut about 1 percent of its power supply to the coastal territory in an effort to pressure the 1.4 million Palestinians there to get their Hamas rulers to stop the launchings.

Britain's Foreign Secretary David Miliband said Saturday in a statement that he was "extremely concerned" by Israel's reduction in electricity to Gaza, and urged Israel to reverse the decision. Miliband also called for a cessation of the rocket fire, and condemned a Hamas suicide bombing in Israel this week that killed one woman.

Israel has said it would not allow a humanitarian crisis to develop in the Gaza Strip.