Israel hammered Hamas targets in the Gaza Strip on Saturday, killing at least 225 people in retaliation for rocket fire, in one of the bloodiest days of the decades-long Middle East conflict.
Israeli Defence Minister Ehud Barak said "Operation Cast Lead" against the Islamist movement, which has also left some 700 wounded, will continue "as long as necessary".
"The battle will be long and difficult, but the time has come to act and to fight," he said.
Exile Hamas leader Khaled Meshaal called in Damascus for a new Palestinian intifada, or uprising, against Israel and promised suicide attacks after a four-year hiatus.
Following the mid-morning bombings, in which some 60 warplanes struck more than 50 targets over the span of just a few minutes, Hamas fired several dozen rockets, killing one Israeli.
Israeli air strikes continued sporadically throughout the day and into the evening.
"We will not stand down and we will not cave in even if (the Israelis) should eradicate the Gaza Strip or kill thousands of us," Ismail Haniya, who heads the Hamas government, said in a defiant radio address.
Meshaal called for a "military intifada against the enemy" and said "resistance will continue through suicide missions".
Hamas has not carried out a suicide attack in Israel since January 2005.
The White House said only Hamas could end the cycle of violence by putting a stop to the rocket fire on Israel.
"These people are nothing but thugs, and so Israel is going to defend its people against terrorists like Hamas," spokesman Gordon Johndroe said at George W Bush's Texas ranch, where the president is preparing to spend the new year.
"If Hamas stops firing rockets into Israel, then Israel would not have a need for strikes in Gaza," Johndroe said. "What we've got to see is Hamas stop firing rockets into Israel."
"The United States hold Hamas responsible for breaking the ceasefire; we want the ceasefire restored. We're concerned about the humanitarian situation and want all parties concerned to work to make sure the people of Gaza get the humanitarian assistance they need," said Johndroe.
He was referring to a six-month truce mediated by Egypt, which ended on December 19, with Hamas refusing to renew it.
Prime Minister Ehud Olmert pledged Israel will do its utmost to avert a humanitarian crisis in Gaza, which is under a crippling Israeli blockade.
"The people in Gaza do not deserve to suffer because of the killers and murderers of the terrorist organisation," he said, referring to Hamas.
He insisted that Israel had only hit Hamas targets, including command structures and rocket-manufacturing installations.
UN chief Ban Ki-moon called for an immediate halt to the violence, as did the European Union, Russia, Britain and France, while several Middle Eastern states and the Arab League slammed Israel.
In Gaza, thick clouds of smoke billowed into the sky. Mangled, bloodied and often charred corpses littered the pavement around Hamas security compounds, and frantic relatives flooded hospitals.
Medics said civilians had been hit, but the majority of the victims appeared to be members of Hamas, branded a terror group by Israel and the West.
Hamas said the strikes destroyed its security structures across Gaza and killed three senior officials - the Gaza police chief, the police commander for central Gaza and the head of the group's bodyguard unit.
Dr Moawiya Hassanein, the head of Gaza emergency services, put the toll at 210 dead and 700 injured, 140 of them seriously.
The bombing came after days of spiralling violence, with militants firing rockets and Israel vowing a fiery response.
Egyptian President Hosni Mubarak, who brokered the six-month truce, slammed the "Israeli military aggression on the Gaza Strip" and blamed "Israel, as an occupying force, for the victims and the wounded".
The bombardment set off angry demonstrations in Israel's Arab towns and in the Israeli-occupied West Bank, as well as protests in countries around the region.
It came less than two months ahead of Israeli elections on February 10.
Foreign Minister Tzipi Livni, the head of the governing Kadima party and one of the front-runners for the premier's chair, said that "today there is no other option than a military operation".
Violence in and around Gaza has flared since the truce ended, and it escalated dramatically on Wednesday.
Israel has generally responded to attacks by tightening the blockade it imposed after Hamas seized Gaza from forces loyal to secular Palestinian president Mahmud Abbas in June 2007. But on Friday it allowed the delivery of dozens of truckloads of humanitarian aid.