A Hamas official says Israel and Gaza militants have reportedly agreed to an Egyptian-brokered ceasefire.

The official said the truce will be announced in Cairo tonight and will come into effect from 10pm Irish time.

Speaking earlier the Israeli Prime Minister Benjamin Netanyahu said his country would be a "willing partner" in a long-term solution.

"No country would tolerate rocket attacks against its cities and against its civilians - Israel cannot tolerate such attacks" he said.

"If a long-term solution can be put in place through diplomatic means, then Israel would be a willing partner to such a solution".

"But if stronger military action proves necessary to stop the barrage of rockets, Israel will not hesitate to do what it necessary to defend our people" he added.

UN urges caution

Meanwhile the United Nations Secretary-General urged strong caution against a ground offensive.

Ban Ki-Moon said "Innocent people, including children, are being killed on both sides".

"I appeal to all - and those commanding...and operating arms (and) weapons - to respect international humanitarian law, to ensure the protection of civilians at all times" he added.

Meanwhile the US Secretary of State Hilary Clinton is also in the region to help the peace talks.

Clinton is to meet Israeli Prime Minister Netanyahu in Jerusalem and then she will discuss the crisis with Egyptian and Palestinian leaders but not with Hamas.

7 Palestinians were wounded in strikes on Gaza overnight but no one was killed in the first night without fatalities since the Israeli air campaign began nearly a week ago.

Over 100 people have died since the conflict escalated.

US President Barack Obama said on Sunday it would be "preferable" to avoid an Israeli ground invasion of Gaza but put the onus on Egypt and Turkey to get Hamas to halt cross-border rocket fire.

Obama said Israel had a right to defend itself from attack.