The Israeli military sought to inflict maximum damage on Hamas today before Ehud Omert's government submitted to an Egyptian-brokered ceasefire that would end the fighting before Barak Obama's inauguration on Tuesday.

Amos Gilad, Israel's top negotiator, flew to Cairo to hammer out the remaining details of that ceasefire agreement. Tzipi Livni, the Foreign Minister, flew overnight to Washington where she and Condoleezza Rice are expected to sign a second agreement committing the United States to measures to stop Hamas re-arming itself.

"Hopefully we're in the final act," said Mark Regev, the Israeli government spokesman.

There was no let-up in the fighting in the Gaza Strip as Israeli troops fought their way almost to the centre of Gaza City, piling the pressure on Hamas to accept unfavourable ceasefire terms. Their assault was so fierce that yesterday they bombed storehouses belonging to a UN relief agency and set fire to a hospital as well as killing a top Hamas hardliner, Said Sayyam. This morning rescue workers pulled 23 bodies from the rubble of the city's Tel al-Hawa district alone. The total death toll is now well over 1,000, half of them civilians.

The precise ceasefire terms are still secret, but Israel's top priority is to halt all smuggling across Gaza's southern border with Egypt so that Hamas can no longer bring in weapons. A second, unstated priority is to secure the release of Gilad Shalit, the Israeli soldier held captive in Gaza since 2006.

Hamas has offered a ceasefire of limited duration but Israel wants no such limit. Hamas wants an immediate Israeli withdrawal from Gaza and the swift reopening of the territory's border crossings, closed by Israel since Hamas took power in 2007, but the Israelis want their demands met first.

Egypt has little sympathy with Hamas and prefers Fatah, the rival movement that Hamas ousted from the Gaza Strip in 2007. It is seeking to reassert Fatah's influence in Gaza by insisting that troops from the Fatah-controlled Palestinian Authority help patrol the southern border, that the PA supervises the other border crossings jointly with Israel, and that Hamas holds reconciliation talks with Fatah.

Hamas has suffered such a pounding over the past three weeks that its surviving leaders in Gaza — as opposed to Damascus — are said to be desperate for the fighting to stop and the group's bargaining position is weak.

One Israeli commentator, Ben Caspit, compared Hamas to the Black Knight in Monty Python and the Holy Grail who "even after having both arms and one leg severed, continued to hop up and down on the remaining leg, screaming and threatening".

A ceasefire will be followed by a fierce debate about who "won". Aside from decapitating Hamas and securing favourable ceasefire terms, Israeli leaders will argue that they have established the principle of deterrence, restored the prestige of its military after its debacle in southern Lebanon in 2006, and served warning to its Arab neighbours that they attack Israel at their peril.

But the war — though extremely popular domestically — has exacted a heavy toll on Israel's standing in the world. International opinion has been shocked by the civilian death toll, by harrowing pictures of Palestinian suffering, by Israel's bombing of UN bases, its obstruction of western aid organisations and its flouting of UN demands that the fighting stop.

The outcry is only likely to grow when the foreign media is allowed back into Gaza and the true scale of the destruction becomes apparent. Israel's leaders could yet be charged with war crimes.