Israeli forces shot dead two Palestinian gunmen and a police officer and kept up missile strikes against militant targets in the northern Gaza Strip on Sunday, residents and medical officials said.

Prime Minister Ehud Olmert said Israel's assault on rocket-launching squads and gunmen would not be open-ended but declined to say when it would finish. He appeared to acknowledge the rocket threat could not be wiped out by the operation.

Several homemade missiles hit the Israeli border town of Sderot, the Zaka rescue service said. There were no reports of casualties although several people were treated for shock.

Israeli forces have killed at least 48 people, more than half of them gunmen, in the five-day operation in northern Gaza, Palestinian medical officials have said.

"We have no intention of conquering Gaza," Olmert said at the start of a cabinet meeting in Jerusalem.

"We have declared that we will never accept the ongoing (rocket) fire and that we would take any steps needed to considerably reduce the fire and prevent terror activity."

The operation, mainly focused on the town of Beit Hanoun, is one of the biggest since Israel's army and Jewish settlers were pulled out of Gaza last year after 38 years of occupation.

It is part of a wider offensive launched in late June after militants, including members of the governing Hamas movement, abducted an Israeli soldier in a cross-border raid from Gaza.

A spokesman for a Gaza militant group said Israel itself could end up killing the captured soldier, Corporal Gilad Shalit, if it didn't stop its bombardment.

"We hold the Zionist enemy responsible for any harm that may befall their soldier as a result of their bombardment of houses or fields or offices or any place where the soldier could be," said Abu Mujahed, spokesman for the Popular Resistance Committees, one of the three factions holding Shalit.

WASHINGTON VISIT

Israeli analysts expect Olmert will end the Beit Hanoun operation before he heads to Washington for talks with President George W. Bush, scheduled for November 13, although a spokesman for the Foreign Ministry said the two issues weren't linked.

The United States has said Israel has the right to defend itself against rocket attacks.

But it has also pressed Israel to relax its curbs on Gaza's crossings to ease a humanitarian crisis in the strip, already suffering under a Western aid embargo imposed when Hamas refused to recognize Israel after taking office in March.

The violence has scuttled hopes of any resumption of peace talks between Israel and the Palestinians, already a remote prospect since Hamas took power following elections. Hamas is sworn to Israel's destruction.

The assault also coincided with efforts by the Palestinians to form a unity government they hope will lead to a lifting of Western sanctions.

Mustafa Barghouthi, an independent lawmaker who has been mediating between Hamas leaders and rival President Mahmoud Abbas, said there could be an announcement within days on formation of a government to replace the Hamas administration.

An earlier deal to form a unity government collapsed weeks ago, deepening a power struggle and raising fears of civil war.

The main stumbling block has been agreeing the new government's stance toward Israel.

Since the start of the overall offensive in late June, 320 Palestinians have been killed, around half of them civilians. Three Israeli soldiers have been killed.

Militants have fired around 300 homemade missiles at Israel this year from Gaza, Israel says. They are rarely deadly.