Top Israeli security officials on Sunday recommended cutting all ties with the Hamas-led Palestinian government and ruled out peace talks with the Palestinian president, Mahmoud Abbas, as long as the Islamic militant group refuses to renounce violence.

Acting Israeli Prime Minister Ehud Olmert speaks during a meeting with Kadima party members in Tel Aviv, Sunday, April 9, 2006. Israel's Security Cabinet on Sunday recommended cutting all ties with the Hamas-led Palestinian government and ruled out peace talks with the Palestinian president, Mahmoud Abbas, as long as the Islamic militant group refuses to renounce violence. [AP]

The recommendation, which essentially approved what has been Israeli policy since Hamas won elections in January, raised the likelihood that Israel will push forward with acting Prime Minister Ehud Olmert's plan to impose a border in the West Bank by 2010.

In a statement, the ministers said there will be "no personal boycott" of Abbas, but rejected any substantive negotiations with the Palestinian leader ¡ª a moderate who hopes to restart peace talks.

The Israeli Security Cabinet, a small group of top government officials, made the recommendation amid increasing Israeli military pressure on Hamas in response to Palestinian rocket fire into southern Israel.

Israeli forces pounded suspected launching sites in the northern Gaza Strip with artillery fire on Sunday, killing a Palestinian police officer and wounding 16 people. The Palestinian government called an emergency meeting to discuss the growing tensions.

Israel has refused to deal with Hamas, demanding that it halt violence, recognize Israel and accept previous interim peace agreements. Israel also has suspended the transfer of $55 million in tax revenues it collects for the Palestinians, dealing a tough blow to the cash-strapped Palestinian government.

Hamas has rejected the ultimatum despite intense international pressure and a growing financial crisis.

The Security Cabinet decision branded the Palestinian Authority a "hostile entity" and said all ties should be cut. Government spokesman Asaf Shariv said relations with Abbas would be limited, and peace talks were out of the question. The recommendations were to be approved by the full Cabinet next Sunday, he said.

"The Palestinian Authority is one unit and does not have two heads," the statement said, adding that Israel will work to "undermine" the Palestinian government. It also said Israel will boycott diplomats who have contact with Hamas.

Nabil Abu Rdeneh, a spokesman for the Palestinian president, said Israel should negotiate with Abbas, who is the head of the Palestine Liberation Organization, because Israel signed its agreements with the PLO. Abu Rdeneh said Israel should not "look for any pretext for escaping from negotiating table."

The policy could give more momentum to Olmert, who plans to draw a border in the West Bank unilaterally by 2010 if he believes a peace accord is impossible.

Under Olmert's plan, Israel would withdraw from large parts of the West Bank, but retain and strengthen major settlement blocs. The plan would fall far short of Palestinian claims to all of the area.

Olmert's Kadima Party won Israeli elections last month, and he is expected to complete formation of a new government supporting his plan in the coming weeks.

Speaking to Kadima activists Sunday evening, Olmert said, "We want this government to be able to fulfill within the coming four years the obligations it took on itself in the political and security areas ... to bring Israel to a safe refuge of peace and final borders."

Israel's tough stance against Hamas has received widespread international backing. The U.S. and European Union, which consider Hamas a terrorist group, last week cut off tens of millions of dollars in aid to the Palestinian Authority.

Israel's Cabinet on Sunday decided to pay Israeli suppliers of fuel to the Palestinians from tax money Israel collects but is refusing to transfer. The decision came as an Israeli fuel company threatened to cut off supplies unless it was paid the $7.6 million it is owed.

The cutoff in aid has compounded an already dire financial situation for the Palestinian government.

In interviews published Sunday, Palestinian Finance Minister Omar Abdel Razek said the crisis was worse than he thought, and he did not know when he would be able to pay salaries to the government's 140,000 workers.

The Palestinian Authority is the biggest employer in the West Bank and Gaza. A collapse in the government would worsen conditions in an area where more than 40 percent of the population live in poverty.