Israel decided on Wednesday to renew pinpoint attacks against Palestinian rocket-launching cells in Gaza, threatening to end its participation in a month-old truce that was first broken by Palestinians less than one hour after it took effect.

The decision came hours after a Palestinian rocket seriously wounded two Israeli teenage boys in Sderot, a town in southern Israel next to the Gaza border. Shortly after the new policy was announced, a rocket was launched from Gaza, but no injuries were reported.

Although Israel declared it remained committed to the truce, the decision to strike against rocket launchers clearly ratcheted up the violence level.

It could also undermine Prime Minister Ehud Olmert's recent efforts to bolster the moderate Palestinian president, Mahmoud Abbas, who is in a faceoff against Hamas. The Islamic militant group controls the Palestinian parliament and Cabinet.

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"The defense establishment has been instructed to take pinpoint action against the rocket-launching cells," Olmert's office said after a morning meeting of senior officials. "At the same time, Israel will continue to abide by the cease-fire."

Palestinian militants violated the truce within an hour after it took effect on Nov. 26. Since then, more than 60 rockets have been fired at southern Israel, the army said.

Israel has so far refrained from responding, but Olmert had warned in recent days that his patience was wearing thin. The injuries of the two boys late Tuesday increased the already intense pressure on Olmert from political opponents and members of his Cabinet to take action.

Hamas government spokeswoman Ghazi Hamad denounced the Israeli decision to "continue their aggression against our people," but added: "We still believe that this agreement is alive, and both sides should respect this agreement because it is (in) the interest (of) our people."

The truce put an end to five months of deadly fighting that followed an attack by Hamas-linked gunmen on an Israeli army post just outside Gaza. Two soldiers were killed and another was captured in that raid, and Israel retaliated by sending ground troops, artillery and aircraft to strike at militants and their rocket squads.

But the incursions failed to stop the rocket fire or win the release of the soldier. When Abbas, a moderate who favors peace talks, persuaded militant factions to agree to a truce, Olmert agreed to pull Israeli forces out of Gaza.

Government spokeswoman Miri Eisin said Israel would do its best to preserve the truce, even while attacking rocket-launching cells. "Israel has shown restraint. Israel will continue to be restrained, and we will only take pinpointed action against the launching cells," she said.

The army said the rocket fired on Wednesday landed in Paelstinian territory, but Israel Radio said it landed in an open field in Sderot, causing no injuries or damage. Islamic Jihad militants claimed reponsibility

Most of the crude weapons fired since the cease-fire have been launched by Islamic Jihad, a radical group backed by Iran that does not participate in Palestinian politics.

Abu Hamza, a spokesman for Islamic Jihad, said the group was not moved by Olmert's threat. "Any harm to our leaders will be met with a harsh response," he said. He said the rocket fire was a response to Israeli arrests of militants in the West Bank, which is not covered by the truce.

He also expressed hope that renewed fighting with Israel would help end internal Palestinian violence. Battles between Hamas and Abbas' Fatah movement have killed 17 Palestinians in Gaza since Dec. 11.

Israel's policy of renewed retaliation could undo progress toward bolstering Abbas against his Hamas rivals. Olmert and Abbas met on Saturday for their first working meeting, and Olmert pledged measures to improve daily life in the West Bank and Gaza as a gesture to the Palestinian president.

Renewed violence could delay or shelve those plans, but Eisin said at the meeting Wednesday, government officials decided to forge ahead with the plans as scheduled.

In other efforts to push forward with peace efforts, Olmert and Egyptian President Hosni Mubarak are to meet Jan. 4 in the Red Sea resort of Sharm el-Sheik, Israeli officials said. Egypt has played a major role in mediating between Israel and the Palestinians, and has been trying to negotiate the release of the captured Israeli soldier.

The Egyptian foreign minister, Ahmed Aboul Gheit, was meeting Israeli officials in Jerusalem on Wednesday to help prepare for next week's summit.

And in an attempt to end the deadly tensions between Hamas and Abbas' Fatah, Jordan has invited Abbas and Palestinian Prime Minister Ismail Haniyeh of Hamas to Amman.

Talks between the rivals over forming a national unity government broke down last month, and Abbas has threatened to call early elections to end the impasse. The tensions led to the recent wave of factional violence.

Haniyeh and Abbas have both accepted the invitation to Jordan. The date of the meeting has not been publicized.

Complete coverage is available in FOXNews.com's Mideast Center.