Israeli ground troops, tanks and armored vehicles advanced on two northern Gaza towns Wednesday in pursuit of Palestinian rocket squads, besieging a well-known Hamas lawmaker's house and engaging militants in ferocious clashes, Palestinian officials said.

A 22-year-old Palestinian was shot dead, security and medical officials said. It was not immediately clear whether he was a civilian or a gunman.

Militants, undeterred by Israel's military might, pressed ahead with their rocket attacks on southern Israel, at one point hitting a school just before pupils arrived.

The surge in violence coincided with a decision by the Red Cross to suspend activities in Gaza after two of its workers were briefly kidnapped. The suspension dealt a major blow to aid efforts in the impoverished, strife-torn territory where Red Cross ambulances are a common sight.

Snipers positioned themselves on more than a dozen rooftops in Beit Hanoun and Jebaliya in northern Gaza as the ground troops fanned out, Palestinian security officials said. Three teenage Palestinian girls were wounded by Israeli bullet fire outside a school in Beit Hanoun, hospital and security officials said.

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Militants, led by gunmen from the ruling Hamas party's military wing, faced off against troops in both towns with land mines, antitank missiles and rocket-propelled grenades, security officials said. Hamas commanders instructed their gunmen not to travel in cars for fear they would draw Israeli airstrikes.

Snipers were also staked out on the roof of a Hamas lawmaker who earlier this month helped to organize a women's demonstration that permitted dozens of Hamas militants to escape an Israeli siege on a Beit Hanoun mosque, Palestinian security officials said.

They locked lawmaker Jamila Shanti and her family inside the house in Jebaliya, and built a sand embankment around the house to protect soldiers from Hamas gunfire, Palestinian security officials said. Troops fired nine rocket-propelled grenades at Shanti's two-story house, which was hit earlier this month in another offensive on Jebaliya, they said.

Bulldozers, skirting regular roads where mines could be planted, created new routes of access by knocking down greenhouses in Jebaliya, Beit Hanoun and neighboring Beit Lahiya, and two small farmers' houses.

The army confirmed it was operating in the area as part of its ongoing offensive against Gaza rocket squads, but gave no other details. It said it had no information that its troops were surrounding Shanti's house.

Beit Hanoun was the site of a weeklong incursion earlier this month in which some 50 militants and at least seven civilians were killed. The operation left behind a wide swath of destruction, but failed to curb the rocket attacks. In the first three weeks of November, militants launched 155 rockets, up from about 70 in October and 65 in September, the army said.

"We advise the occupation to spare itself the effort of invading Gaza, because this is not going to stop rockets" said Hamas military wing spokesman Abu Obeidah. "It's going to escalate rocket fire."

Late Tuesday, an Israeli man wounded by Palestinian rocket fire earlier in the day died of his injuries.

"No government would tolerate such attacks, and neither will Israel," said Israeli government official David Baker, after the second rocket fatality within a week.

Separately, a rocket fired from Gaza hit the entrance of a school in southern Israel early Wednesday. Another rocket fell nearby and a third hit a farm close to the Israel-Gaza border fence, damaging a chicken coop. No one was hurt in any of the attacks.

At a meeting Wednesday of Israel's Security Cabinet, senior government ministers were in broad agreement that there was no point to pursuing a large-scale offensive against Gaza militants without a political goal, a meeting participant said.

Israel has been boycotting the Hamas-led government, which took power in March, because it has refused to recognize Israel and renounce violence. Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas, a pragmatist from the Fatah Party, have agreed to try to restart peace talks, but Abbas has been reluctant to schedule a meeting without assurances he will reap something, like a release of Palestinian prisoners held in Israeli jails.

Two top Olmert aides are to meet with two top Abbas aides in the West Bank town of Ramallah on Wednesday to discuss Palestinian efforts to form a more moderate coalition government and the release of an Israeli soldier held by Hamas-linked militants.

Separately, Defense Minister Amir Peretz told the Security Cabinet that security officials were instructed to broaden their search for defense systems to protect Israeli citizens against the homemade rockets, the meeting participant said, speaking on condition of anonymity because the meeting was closed.

In other violence on Wednesday, Israeli tank fire killed a member of Hamas' police force in northern Gaza, Palestinian officials said. The army said it fired at a group of armed men laying explosive charges in the path of soldiers operating in the area. Palestinians said he was standing with a group of men outside a building.

On Tuesday evening, a former Fatah Cabinet minister, Abdel Aziz Shahin, 62, was shot and wounded in Gaza City just after criticizing the ruling Hamas group on a radio show, hospital officials said. There was no claim of responsibility.

Abbas, who visited Shahin in the hospital on Wednesday, deplored the escalation of Israeli military activities at a time when Palestinian factions, he said, were discussing a cease-fire. Commenting on the attack on Shahin and the kidnapping of two Italian aid workers by Gaza gunmen on Tuesday, Abbas said he hoped a planned coalition government would allow Palestinians to "live in peace and security."

Abbas is to meet with Palestinian Prime Minister Ismail Haniyeh of Hamas later in the day for coalition talks, belying Fatah claims earlier in the week that talks had broken down.

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