A Hamas leader on Wednesday renewed his call for dialogue with Palestinian President Mahmoud Abbas's rival Fatah faction a week after Abbas restarted talks with Israel.

Israeli Prime Minister Ehud Olmert and Abbas formally relaunched a U.S.-sponsored peace process last week and Israel has since stepped up raids on Hamas-run Gaza to try to curb rocket fire by militants.

Hamas Islamists, who have vowed to undermine the peace effort by fighting Israel, seized control of Gaza in a brief civil war with Fatah in June, prompting Abbas to dismiss a Hamas-led government and reopen talks with the Jewish state.

Hamas has since called for dialogue with Fatah but Abbas, who holds sway in the larger West Bank, rules out talks unless the Islamist group first gives up control of the Gaza Strip -- a condition Hamas rejects.

"We believe it is necessary to immediately begin a non-conditional dialogue that will work to heal the Palestinian wounds," Ismail Haniyeh, prime minister of the government dissolved by Abbas, told Reuters in an interview on Wednesday.

Israel says dialogue between Fatah and Hamas, sidelined by the West, could torpedo the peace process.

A senior Abbas aide said Saudi Arabia, which brokered a previous agreement between the Palestinian factions, had relayed a message to Abbas from Hamas offering talks this week, but that the president repeated his condition on Gaza.

Abbas's administration also announced it was centralizing the distribution of alms in the West Bank and Gaza. The move followed an earlier decision to shut down more than 100 mostly Islamist charities, and drew charges from Hamas that Abbas sought to starve his political rivals of grassroots funding.

"READY FOR OPERATION"

Israel has designated Gaza an enemy entity and last week ordered tougher action against Hamas militants.

The Islamist group said two dozen of its members have been killed in Israeli raids since last week's conference in Annapolis, Maryland.

"It is very clear that Annapolis has provided a cover for this Israeli aggression," Haniyeh said.

He called on Arab countries that attended the Annapolis conference to protest against the Israeli attacks.

Israeli Defence Minister Ehud Barak said this week that a major ground offensive in Gaza, which Israel evacuated in 2005, was not imminent. But Army Chief of Staff Gabi Ashkenazi said troops were ready to invade if the government gave the order.

"If necessary, we are ready for the possibility of an operation," Ashkenazi said in an Army Radio interview broadcast on Wednesday. "Until then, we must use all other methods, and act every day and night, in order to provide security."

On Wednesday, two Hamas militants were killed and two others wounded in an Israeli missile strike. Residents said the group had fired mortars at Israel, hospital officials said.

Another Hamas gunman died in an explosion near the border fence. The army denied involvement, raising the possibility that a bomb the Hamas gunman was planting went off prematurely.

The army said this week that over 2,000 makeshift rockets and mortar bombs have been fired into Israel this year.

Separately, the decision-making body of the Fatah-dominated Palestine Liberation Organisation formally approved on Wednesday Abbas's and Olmert's agreement at Annapolis to try to reach a deal on Palestinian statehood by the end of 2008.

(Additional reporting by Ari Rabinovitch in Jerusalem and Wafa Amr in Ramallah; writing by Rebecca Harrison; editing by Elizabeth Piper)