GAZA CITY -- The defiant leader of Hamas in the Gaza Strip vowed on Monday the Islamists would emerge victorious from the war in the Palestinian territory as Israeli tanks advanced on the main city.

After 17 days of conflict which have so far killed more than 900 Palestinians, Ismail Haniya made a rare televised address only hours after his Israeli counterpart threatened to hit Hamas with an "iron fist" if it did not end the rocket attacks which the war itself is designed to halt.

But while Prime Minister Ehud Olmert insisted Operation Cast Lead was achieving its objectives, more rockets rained down on Israel, albeit without causing casualties.

Palestinian medics, meanwhile, said that at least another 25 people had been killed during the latest clashes, bringing the overall toll to 917, including 277 children. Another 4,100 have been wounded.

Ten Israeli soldiers and three civilians have been killed in combat or by rocket attacks since the operation began on December 27.

"We are approaching victory," Haniya said in his broadcast from an undisclosed location in Gaza. "The blood which has flowed will not have flowed in vain as it will bring us victory, thanks be to God.

"I tell you that after 17 days of this foolish war, Gaza has not been broken and Gaza will not fall."

Haniya also said that the "blood of children" who have been killed in the conflict would serve as a "curse which will come back to haunt" US President George W. Bush.

Bush has consistently blamed Hamas for the conflict, telling reporters on Monday that while he wanted to see a "sustainable ceasefire," it was up to Hamas to choose to end its rocket fire on Israel.

"I am for a sustainable ceasefire. And a definition of a sustainable ceasefire is that Hamas stops firing rockets into Israel," he said.

After Israel and Hamas both ignored a UN resolution last week calling for a truce, the focus of peace efforts turned to an Egyptian peace plan which calls for an immediate ceasefire to allow humanitarian aid into Gaza, talks on opening Gaza's border crossings and taking steps to prevent arms smuggling.

Olmert said he was grateful for Cairo's efforts but said Israel's key demands were non-negotiable.

"We want to end the operation when the two conditions we have demanded are met: ending the rocket fire and stopping Hamas's rearmament. If these two conditions are met, we will end our operation in Gaza," he said in the southern town of Ashkelon which has been the target of dozens of Hamas missiles.

"Anything else will meet the iron fist of the Israeli people, who are no longer ready to tolerate the Qassams (rockets)."

An army spokesman said that close to 30 missiles had been launched from Gaza on Monday, although there were no reports of casualties.

Residents said Israeli tanks managed to punch their way to the southern rim of Gaza City, advancing several hundred meters (yards) in the neighborhoods of Eijline, Tuffah and Zeitun where the crump of gunfire echoed constantly.

Troops also staged an incursion into the southern town of Khan Yunis where witnesses said some 35 houses were destroyed.

A military spokesman said warplanes had hit more than 25 targets, including four rocket launch sites and two cars containing Hamas fighters.

Troops also seized anti-aircraft missiles, mortar rounds and machine guns, the spokesman added.

Israeli officials on Sunday suggested that what is now Israel's deadliest onslaught against Gaza could be approaching its end.

Palestinian prime minister Salam Fayyad, whose remit is limited to the West Bank, said the Egyptian initiative offered the best hope of peace, putting pressure on both Israel and Hamas to respond positively.

"He who refuses, voices reservations or moves slowly on this initiative bears the responsibility of explaining themselves, especially to the people of Gaza," he said.

Britain's former premier Tony Blair, now a peace envoy for the international community, said after meeting Mubarak that the elements for an immediate truce are in place and talks were "at a sensitive and delicate" stage.

Meanwhile Israel suffered another humiliating reverse at the hands of the United Nations, when the world body's Human Rights Council adopted a resolution accusing it of "grave" human rights violations against Palestinians.

The resolution setting up a fact-finding mission to investigate Israeli violations against Palestinians was passed after a split between Western countries and the others over the wording.

Attention was also focusing on the task of rebuilding Gaza after the war, with the Czech Republic, which currently holds the revolving EU presidency, saying it would convene a donor conference to address humanitarian needs.

Aid deliveries have been massively disrupted by the conflict, with agencies warning that residents are running out of food and even having to burn their furniture to stay warm in the bitterly cold nights.