Palestinian terror groups have begun successfully digging hundreds of tunnels intended for arms smuggling near the Gaza Strip's border with Egypt, Israel Defense Forces Chief of Staff Dan Halutz said on Tuesday.

Halutz told the Knesset Foreign Affairs and Defense Committee that IDF troops had in recent days pinpointed at least 100 1.5 km-long tunnel entrances dug by Palestinian militants in the Rafah area in southern Gaza, in the course of the days-long "Operation Squeezed Fruit." He said at hundreds more of these entrances have already been dug.

He added that militants have been continuously smuggling anti-tank missiles and large amounts of light weaponry in recent months.

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In that regard, Halutz said a military presence in the Philadelphi route would be preferable to the absence of IDF forces in the area, Army Radio reported.

"We are close to the decision point regarding our presence along the Philadelphi Route, if the present reality of arms-smuggling doesn't stop," Halutz said.

The chief of staff said that Egyptians have been operating more actively than in the past against the smuggling of weapons and ammunition, but that Israel still expected more comprehensive activities on their part to thwart smuggling at its source.

Defense Minister Amir Peretz said earlier Tuesday that Israel would not reoccupy the Gaza Strip, but the IDF would continue to operate against weapons smuggling if needed.

"We have no intention of reoccupying the Gaza Strip," Peretz said during a tour of the Southern Command. "We have no intention of remaining in the Gaza Strip."

"These operations are designed to reduce the areas from which Qassam rockets are fired and deal a blow to to arms smuggling through tunnels," said Peretz. "[The intent is to] deal with the immediate threats and the process of strengthening [of militant organizations] which is taking place."

"There is no military operation that will not be carried out, should we reach the conclusion that it is the way to defend the citizens of Israel," continued Peretz. "We will not allow Gaza to turn into southern Lebanon."

Peretz toured the Gaza Strip border area on Tuesday and spoke with commanders of the Kerem Shalom base. Peretz said the IDF is carrying out pinpointed operations aimed at reducing Qassam fire and arms smuggling. He said that no broad campaigns are planned, adding that the restraint is "only in order to satisfy public opinion."

After midnight on Monday, the Israel Air Force targeted two Qassam launchers in the Beit Hanun area, from where rockets had been fired against Sderot. Tuesday night, IDF destroyed another rocket launcher in the area.

Regarding humanitarian aid to Palestinians in the Gaza Strip, the defense minister said Israel is making an effort to increase the aid, while terrorist organizations are harming the transfer of aid.

"The best example of this is the tunnel that was discovered under the Karni commercial crossing," said Peretz.

Following discovery of the tunnel, the Karni crossing was shut down. "This proves that the terrorist organizations are trying to cause a humanitarian crisis and increase [Palestinian] suffering, because they believe it benefits them," said Peretz.

IDF forces pulled out from the Philadelphi route in the southern Gaza Strip early Tuesday, concluding the operation to uncover arms-smuggling tunnels.

But it added that "the forces which have already pulled out are already preparing for a 'return operation' within the next few days.

IDF drone fires at rocket launchers
An IDF drone fired two missiles at rocket launchers in the northern Gaza Strip used to fire Qassams at Sderot, Israel Radio reported early Tuesday morning.

On Monday evening three Qassams landed in Sderot following a day of fighting in the Gaza Strip that left seven Palestinians dead.

Several people were treated for shock after two rockets hit the western Negev town, damaging three cars.

A third rocket hit an open area between Sderot and Kibbutz Or Haner.

Seven Palestinians were killed and over 30 others injured in a clash between armed militants and Israel Defense Forces soldiers in the northern Gaza Strip on Monday.

According to the IDF, all of the dead men were armed, and one was a senior member of the Popular Resistance Committees (PRC).

The PRC, an umbrella of Palestinian militant groups in Gaza, said the target of the IDF operation appeared to be Ata Shindari, who led the group's rocket-launching branch.

Shindari and one of his brothers were killed by the IDF, Abu Abir, the group's spokesman said.

PRC spokesman Abu Abir vowed revenge for Shimbari's death.

"This is the calm before the storm," he told a news conference.