Prime Minister Ehud Olmert warned on Wednesday that Israel\'s imminent truce with Hamas in and around the Gaza Strip could be short-lived and said the military stood ready to act if it failed.

"We have no illusion but that this truce is fragile and could be short-lived. Hamas has not changed its skin," Olmert said at a conference in Bet Yehoshua, north of Tel Aviv.

His warning came just hours before the truce was due to take effect at 0300 GMT on Thursday, after Egypt mediated for months between Israel and the Hamas to end the bloodshed in and around the impoverished Palestinian territory.

"If terror continues, Israel will have to work to remove the threat," Olmert said, stressing amid scepticism over the truce that the Israeli armed forces were ready to act if the ceasefire failed.

On the other hand, Israel will ease its blockade of the territory "if the fighting indeed ceases Thursday as planned," the prime minister\'s spokesman Mark Regev said.

Egypt announced the deal on Tuesday, and the Palestinian Islamist movement Hamas, which Israel blacklists as a terror group, confirmed it agreed to hold its fire.

Top Israeli defence official Amos Gilad underlined after returning from talks in Cairo that the two sides had reached "understandings with Egypt" rather than a formal accord.

In Washington, the White House gave a cautious welcome to the agreement. "We hope this means no more rockets will be fired by Hamas at innocent Israelis," said Gordon Johndroe, the White House national security spokesman.

He hoped the deal would also help improve the atmosphere of peace talks between Israel and the Palestinians headed by president Mahmud Abbas, whose writ has been limited to the West Bank since Hamas violently seized power in Gaza last June.

Abbas, on a visit to Sanaa, hailed the deal as "good news for us".

But scepticism was high among residents on both sides of the border.

Hamas spokesman Fawzi Barhoun, however, insisted that the Islamist group would "not give Israel any pretext to violate the truce," while Abbas urged "all movements within the Gaza Strip to adhere to the truce."

The radical Islamic Jihad vowed to respect the deal, stressing however it had reservations and saying its fighters had fired off at least nine rockets at Israel from Gaza on Wednesday.

Israeli authorities said Palestinian gunmen also fired at Israeli civilians working near the border fence. No one was wounded, but Israeli authorities closed down the Nahal Oz terminal which supplies virtually all of Gaza\'s fuel.

The violence continued into the final hours, with Palestinian militants firing 38 rockets and mortar rounds and Israeli forces conducting air raids.

Two Palestinian gunmen were wounded in air strikes in northern Gaza, and a woman was hurt when a rocket hit a house in southern Israel, medics and witnesses on both sides of the border said.

Since Hamas seized power, Israel has carried out near-daily raids, killing hundreds of Gazans -- mostly militants -- but failing to halt the rocket and mortar fire which has killed four Israelis over the same period.

Senior Hamas official Khalil al-Hayya said on Tuesday the truce would initially last for six months.

Gilad, for his part, said he expected Egypt to prevent weapons from being smuggled across its border into Gaza.

He also said negotiations has made progress on a proposed exchange of Palestinians held by Israel for Gilad Shalit, a young Israeli army corporal captured by Hamas in a deadly cross-border raid from Gaza two years ago.

Syria, which is the base in exile for Hamas political supremo Khaled Meshaal, said it supported the truce and called on Israel to honour its side of the bargain.

"We support the lifting of the boycott of Gaza, and we hope and we are waiting to see whether the Israelis are going to fulfil their part of this truce," Syrian Foreign Minister Walid Muallem told reporters in New Delhi.

Amid a chorus of international approval, UN chief Ban Ki-moon hoped the truce would "both provide security and an easing of the humanitarian crisis in impoverished Gaza, and end rocket and mortar attacks against Israeli targets".

And the EU presidency, currently held by Slovenia, commended the Egyptian government for its mediation role and urged "all the parties concerned to abide by the agreed cessation of violence".