Prime Minister Ehud Olmert vowed Wednesday that Israel would take 'painful' measures against Hamas, and ruled out any possibility of talks toward a cease-fire.

"We are not talking to Hamas and we are not going to compromise with someone that is consistently shooting rockets on the heads of Israelis," Olmert told foreign journalists at a news conference, speaking in English.

"We will deal with Hamas in other ways and these ways will be very painful."

The prime minister also pledged, however, to press ahead with peace talks with the Palestinian Authority until an agreement is achieved.

"We are absolutely determined to carry out these talks until we finalize a solution," he said.

Olmert said he believed an outline of a two-state solution can be achieved this year.

In an especially emotional statement, he insisted that the talks are essential. "If I want an excuse not to negotiate, believe me, I have many. If the other side wants an excuse to stop the process, they can find many," he said. Instead, he said, the two sides must concentrate on peace talks to settle their differences.

Olmert also called for concerted world action to prevent Iran from acquiring weapons of mass destruction. He said "Israel has not changed its mind, based on its information, that Iran is attempting to achieve a non-conventional capacity," a reference to nuclear weapons, despite Iran's denial.

He said that "world leaders have said every option that can be of consequence on this issue should be considered, and I agree with this," a possible reference to military action.

Livni: IDF Gaza ops help move peace talks forward

Foreign Minister Tzipi Livni on Wednesday defended the Israel Defense Forces' operations against Palestinian armed groups in the Gaza Strip as necessary for the advancement of peace negotiations.

Speaking before a conference organized by the Jerusalem Center for Public Affairs in the capital on Wednesday, Livni warned of the adverse impact a possible Hamas-Fatah rapprochement would have on future Israel-PA relations.

"If the Palestinian national movement gives in to the other group [Hamas] this will have consequences on our ability to move forward in the political process," Livni said.

Livni also said that Israel would insist the Palestinians renounce all demands and declare an end to the conflict as part of any signed peace agreement. She added that a future Palestinian state would be the only possible solution to the Palestinian refugee problem.

Livni expressed concern at what she termed a growing trend of de-legitimization of Israel in world public opinion.

"If there are problems that we are facing, it isn't just our existence here but on our right to exist as a Jewish state," Livni said. "There is a tendency to deny our legitimacy as a national home for the Jews."

"It's clear to use what our values are but there is a huge, insufferable gap between Israel and its values versus Israel's image abroad that creates a lack of legitimacy," Livni said.

"I'm ready to stand before the judgement of the international community as long as it will judge me according to its values. I would expect that when civilians are harmed by deliberate terrorism, people won't make a comparison between them and Palestinian civilians that are harmed during Israel's defense operations."