Palestinian intelligence agents, working for Israel in its recent "Operation Cast Lead," were exposed and many of them captured or killed in the aftermath, U.S. officials said.

The ongoing round up is ongoing and expanding, these sources said. In the course of the operation, Israel also failed to find and reclaim Gilad Shalit, an Israeli soldier captured by Hamas in 2006, and Tel Aviv also failed in its planned targeted killing of Ahmad Haabri, the commander of Hamas' military arm, the Al-Qassam Brigades, these sources said.

"The use of Palestinian agents to spy on Hamas has been Israel's operating philosophy for many years," said former CIA counter-terrorism chief Vince Cannistraro.

After Israel withdrew from Gaza three years ago, tensions between the Palestinians came to a head when Hamas seized power in a bloody coup in 2007. Grudges held against Hamas made many Palestinians "susceptible to recruitment," said a serving U.S. intelligence official. In addition, since its withdrawal from Gaza, Tel Aviv found it much more difficult to develop sources on the ground, and it welcomed recruits, this source said.

In "Cast Lead," intelligence supplied by Palestinians in Gaza played a vital part in Israel's targeting of tunnels and mosques that were suspected of covertly storing munitions, U.S. sources said. Stationed by potential sites, Palestinian agents would use cell phones to convey information which was intercepted by Israel's famed 8200 Signals Intelligence Unit and forwarded to Israeli commanders.

The intelligence supplied to Israel may have saved lives because it added precision, said several sources. In one case, the Israeli Air Force was able to take out three mosques serving as arms depots and enabled pinpoint strikes on 40 tunnels, canceling a planned carpet bombing of the area, U.S. officials said.

Yet in the end, the cost among Israel's human assets in Gaza proved to be extremely high. Hamas counterintelligence had its own listening technology, U.S. officials said.

Late last month, Hamas announced that it was strengthening its control over Gaza and hunting down collaborators with Tel Aviv. Ehab al-Ghusain, spokesman for the Hamas Interior Ministry said: "The internal security service was instructed to track collaborators and hit them hard." More than a hundred of these have already been arrested and others are still being rounded up.

Amnesty International complained the Hamas was carrying out a "deadly campaign" against its rivals in Gaza and alleged that some were shot dead in hospitals after having been treated for their wounds.

The human rights organization urged Hamas to allow "an impartial force" into the area to investigate the allegations.

Inside Gaza there was widespread speculation on the street that Israel had planned to topple Hamas and put Palestinian Authority President Mahmoud Abbas, the rival Fatah leader, into power.

For some time, Fatah has had ties with the CIA and a record of spying on Hamas, a former U.S. intelligence official said. In fact, the George W. Bush administration had been providing covert funding for operations designed to overthrow Hamas using Palestinian militias, U.S. officials said.

During the early stages of "Cast Lead," Hamas spokesman Fawzi Barhoum had alleged that Fatah had formed a secret cell to collect information on secret Hamas installations and pass it on to Israel. Barhoum also alleged that the cell was headed by a senior Abbas adviser, Tayeb Abdul-Rahim.

Hamas claimed that intelligence supplied for collaborators enabled Israel to kill Hamas Interior Minister Saeed Siyam, and said that it had taken the spies into custody.

U.S. officials confirmed that the latest purge of Palestinian collaborators by Hamas began even as Israel and Hamas were coming to agreement on the current ceasefire.

The Fatah-Hamas spy war has been going on for some time. In late 2007, Abu Obaida, spokesman for the Al-Qassam Brigades, announced that several arrested spies had confessed under interrogation that they had been involved in the assassination of several Hamas leaders, including the prominent Abdel Aziz al-Rantissi who was killed in 2004.

Yet in spite of inside knowledge, Israeli forces were unable to locate and recapture its soldier Gilad Shalit in the latest operation.

Former U.S. Ambassador David Mack told the Middle East Times that in spite of Israeli allegations, Shalit was not captured by Hamas but a radical splinter group. "Hamas can't control Gaza's crazies," Mack said.

All the same, Hamas is using Shalit as a bargaining chip, upping the stakes for the return of the soldier by asking for the release of 1,250 jailed Palestinians in return for the Israeli, raising the figure from 1,000 prisoners made before the war. The prisoners include multiple convicted murderers from organizations such as Tanzim, Fatah, Hamas, and the Popular Front, U.S. sources said.

Back in Israel, a joint probe by Israeli military intelligence and Shin Bet, its counterintelligence organization, is trying to determine the degree of decimation of Israel's human assets in Gaza, something they blame on flaws in operational technique, careless trade craft or improper or careless handling of the information.

Israel launched "Cast Lead" on Dec. 27. The offensive lasted for 22 days and killed 1,230 Palestinians and wounded more than 5,450 others, many of whom were civilians.