(Ibraheem Abu Mustafa/Reuters)

Palestinians inspect Badr mosque, after it was bombed by military aircraft on Saturday

Israel said that its withdrawal did not mean it was scaling back its operation against the Islamists, but merely suspending it temporarily for a two day visit by Condoleezza Rice, the US Secretary of State.

“This very limited (Gaza) operation was intended to show Hamas what could happen, what you may call a ’prequel’,” said an Israeli

“If they decide they’ve seen enough and stop the rockets, if they get the message, then we may get into a period of quiet. If they continue to fire the rockets, then there will be more operations like this one, or worse.”

But Hamas, the Islamist group which rules the Gaza Strip since its military overthrow of forces from its rival Fatah movement, issued a taunting message saying that the Israeli incursion had flopped.

"This retreat is an expression of the failure of the Israeli soldiers facing the fighters of the Ezzedine al-Qassam Brigades," said Sami Abu Zuhri, a Hamas spokesman.

A senior Israeli security source has told The Times that the incursion was triggered last Wednesday when an airstrike killed five top Hamas militants who had been training in Iran and Syria. They had been planning to carry out a terrorist attack inside Israel, the source said.

Hamas launched a barrage of homemade al-Qassam rockets in retaliation for their deaths, prompting the Israeli army to move beyond the borders of Gaza where the rockets were being launched. The fiercest day of fighting was Saturday, when more than 60 Palestinians died, about half of them civilians.

Yesterday the streets of Gaza City were choked with funeral corteges, as gunbattles between militants and Israeli soldiers raged a couple of miles away. The victims included several children and a 21-month-old baby. Israel said the high civilian death toll was Hamas's fault for storing weapons in residential areas.

Israeli airstrikes continued during the night, targeting a Hamas administration building and militants' workshops where weapons were made and stored.

The military withdrawal began around midnight, as foot soldiers moved back from the Jabaliya refugee camp, where there has been fighting for several days. Palestinian medics found at least three more bodies in Jabaliya after the Israelis moved back. Residents who had been trapped in their homes emerged to fetch food and scavenge any equipment that the Israelis had left behind.

Ahmed Dardouna said that he and his nine children had for days been confined to one room by soldiers who took over the rest of the house.

"We couldn't distinguish day from night," he said. "The sounds of shooting and explosions, mixed with the screaming of soldiers and the screaming of my children who were asking to go to the bathroom and for food, is still in my ears."

The Israeli death toll is believed to number three - two soldiers killed in the fighting in Jabaliya, and a civilian killed by a rocket.

Mahmoud Abbas, the Palestinian President who belongs to the Fatah movement which Hamas removed from Gaza, has broken off peace talks with Israel in protest at the death toll in Gaza, and the UN, the EU and Turkey have criticised Israel for disproportionate use of force.

Riots broke out in the Fatah-controlled West Bank cities yesterday as Palestinians protested against the killings. One person died and a dozen were injured in clashes with Israeli security forces.

Hamas has called for renewed talks with the West Bank administration to reforge a Palestinian national unity government, which was broken by Hamas when its gunmen drove Fatah forces from Gaza.

Dr Rice is to hold talks in Jerusalem and the West Bank city of Ramallah tomorrow and Wednesday on moving Israeli-Palestinian peace negotiations forward. Washington hopes a Palestinian statehood deal can be reached this year.

But as both sides count the cost of the five days of violence, the peace process is likely to be the most prominent casualty.

www.timesonline.co.uk/tol/news/world/middle_east/article3473788.ece