Hamas yesterday declared itself bolstered by the Arab Spring and the exchange with Israel of more than 1,000 Palestinian prisoners, as the group mounted a show of strength with tens of thousands attending a lavishly staged rally in the centre of Gaza City.

Gaza's ruling Islamic faction bussed in supporters from across the territory for a mass rally to mark its 24th anniversary at which their leaders' rhetoric laid heavy emphasis on continued adherence to armed struggle and the eventual "liberation" of the whole land, including what is now Israel.

Ismail Haniyeh, Gaza's de facto prime minister, told the rally: "We affirm that armed resistance is our strategic option and the only way to liberate our land, from the [Mediterranean] sea to the River [Jordan]. God willing, Hamas will lead the people... to the uprising until we liberate Palestine, all of Palestine."

Mr Haniyeh sounded a triumphalist note on the faction's success in using its 2006 capture of the Israeli soldier Gilad Shalit to secure this October's release of prisoners. And asserting that Hamas would be a beneficiary of Arab uprisings that have heralded the rise of Islamist political groups, he declared: "No one inside or outside the Palestinian arena can bypass Hamas."

As Mr Haniyeh arrived on stage, a 10-man vocal group led the crowd in a chant of "We will not recognise Israel". Earlier, the group had sung the praises of the Hamas military wing. But the only visible sign of armed militants at this year's rally was a small contingent of masked men carrying AK47s and forming a ceremonial guard behind Mr Haniyeh as he greeted the crowd.

While insisting that Hamas wanted to end the split between it and Fatah – the purpose of further talks in Cairo between the two Palestinian factions scheduled this month – Mr Haniyeh implicitly pointed to a possible obstacle by stressing that Palestinian unity could not mean sacrificing the principle of "armed resistance".

The uncompromising oratory at the rally glossed over political and military complexities which have seen Hamas leaders at times offer a long-term truce in return for a Palestinian state on 1967 borders, and make efforts, including for much of this year, to prevent smaller factions from firing rockets into Israel.

But they coincided with increasing suggestions by the Israeli military that it is contemplating a fresh assault three years after Operation Cast Lead, the offensive which killed 1,300 Palestinians, about half of them civilians.

Colonel Yonaton Branski, deputy commander of the Israeli Defence Forces' Gaza Division, said this week that we "can't avoid another confrontation" with Hamas which he said had steadily built up its arsenal since the 2008-09 operation. Military officials have also pointed to the growing strength of the smaller, Iranian-backed Islamic Jihad.

As life went on as normal elsewhere, much of Gaza City appeared indifferent to the rally, including in cafes where it was being shown live on TV. Physiotherapist Sameh Aloul, 30, said he doubted that either Hamas or Fatah were capable of winning an election tentatively scheduled for May 2012 and added: "In my opinion it is a waste of money to have this luxury festival."