Gaza militants bombarded southern Israel with 20 mortar rounds in the space of an hour midday Tuesday, provoking Israeli ground strikes that killed three militants from the territory's ruling Hamas group.

The violence flared in northeast Gaza just as Israel's top leadership was debating whether to pursue a truce with the Islamic Hamas or embark on a broad military operation against it. There were no casualties on the Israeli side from the mortar barrage.

Since Israel withdrew its troops from Gaza three years ago, militants have been tormenting southern Israel with near-daily rocket and mortar attacks, confounding Israel's high-tech military with their crude weapons. The rocket fire has intensified since the Hamas militant group took control of Gaza last year.

Israel has so far limited its military reprisals to pinpoint attacks, fearing a broad military campaign would result in heavy casualties for its troops

But with four Israelis killed in rocket and mortar attacks this year, Israel's leadership is under domestic pressure to do something about the assaults on its territory. On Tuesday, Israel's top three officials — Prime Minister Ehud Olmert, Defense Minister Ehud Barak and Foreign Minister Tzipi Livni — sat down to discuss what course to take.

As they met, Hamas militants launched their mortar barrage. Israeli military said it carried out two ground strikes against the mortar squad after 20 mortars fell on border areas. Hamas said three members of the group's military wing were killed during Israeli strikes on a mortar-launching squad.

Israel's military action "clearly indicates that Israel not interested in achieving calm," Hamas spokesman Sami Abu Zuhri said. "Therefore they must be ready to pay the price."

For months, Egypt has been trying to broker a truce between the two sides. But the cease-fire efforts have faltered over Israel's demand that Hamas free an Israeli soldier captured two years ago and Hamas' demand that Israel lift a blockade that has confined Gazans to their tiny seaside territory and deepened their poverty.

Making good on a promise to former U.S. President Jimmy Carter, Hamas recently allowed the captured soldier, Cpl. Gilad Schalit, to send a letter to his parents, which was delivered to them on Monday.

On Tuesday, Schalit's father, Noam, told The Associated Press that his son pleaded for his life and appealed to his government not to abandon him. The elder Schalit declined to quote directly from the letter.

Gilad Schalit has not been seen since he was seized in a cross-border raid in June 2006. An audio recording of his voice and two other letters he wrote have been released.

Israeli media speculated that the relay of the letter might signal movement toward freeing Schalit, and implied that could deter Israeli officials from launching a Gaza invasion.

But senior Defense Ministry official Amos Gilad, Israel's representative to the Gaza truce talks, told Israel's Army Radio that he saw no connection between the release of the letter and the Israeli leadership's scheduled meetings on Gaza. A larger group of Cabinet ministers with security responsibilities are to hold further talks Wednesday on Gaza.

Overshadowing any decision will be a new corruption probe against Olmert, which threatens to topple him and possibly his government. Both Livni and Barak are working to unseat Olmert, but a Gaza operation could put any political maneuvers on hold.

This week, Hamas will mark the first anniversary of its violent takeover of the coastal strip from security forces affiliated with moderate Palestinian President Mahmoud Abbas. The group, which has killed more than 250 Israelis in suicide attacks, rejects the Jewish state's right to exist, but has said publicly that it is interested in a truce to rearm and regroup.

While battling militants in Gaza, Israel has been trying to pursue peace with Abbas and his West Bank government. Peace talks resumed at a U.S.-sponsored conference in November, after seven years of violence, but have been marred by the same problems that have derailed earlier rounds of talks, most prominently, Israeli settlement activity and Israeli security concerns.

On Tuesday, a politically charged tax transfer from Israel reached the Palestinian treasury a week late, Yusuf Zumor of the Palestinian Finance Ministry confirmed.

Israel said it withheld nearly a third of the $75 million to cover Palestinian debts to Israel's electric company and to Israeli hospitals that treated Palestinians.

Palestinian officials believe Israel held up the payment for a week because Prime Minister Salam Fayyad lobbied European nations not to upgrade their relations with the Jewish state.

Israel denies that charge, and on Sunday, Israeli Finance Minister Roni Bar-On said the transfer was held up by a trip he took and a Jewish holiday earlier this week. But, he said Fayyad exhibited "a kind of behavior that, in terms of our relationship with the Palestinians, we should not have seen."

Another government official, however, acknowledged that the deduction to cover part of the Palestinians' $60 million debt was connected to Fayyad's actions. The official was not authorized to discuss Israeli policy decisions and spoke on condition of anonymity.

Zumor said Israeli officials didn't tell the ministry why the money was withheld.

Israel collects certain tax revenues for the Palestinians and transfers the money each month. The revenues go to pay the salaries of government workers, whose wages were delayed because the transfer was overdue.