An Israeli minister gave warning yesterday that the Gaza faces a “holocaust” if Islamist militants there do not end their daily barrages of home-made Qassam rockets, and their increasing use of Iranian-built Grad missiles.

“The more Qassam fire intensifies and the rockets reach a longer range, they will bring upon themselves a bigger holocaust because we will use all our might to defend ourselves,” Matan Vilnai, the Deputy Defence Minister said.

The use of the term "holocaust" is usually restricted to descriptions of the Nazi genocide of the Jews in Europe in the Second World War, and many Israelis resent its use in any other context. Mr Vilnai’s deployment of the word appeared to show Israel’s growing frustration that Hamas and other militant groups in Gaza refuse to curb their attacks, despite heavy tolls inflicted in Israeli air strikes and tank raids.

As Israeli media relayed his controversial comments, Mr Vilnai’s spokesman was forced to issue a clarification. “The minister used the Hebrew term 'shoah' which means 'catastrophe' and in this context does not refer to the 'the Shoah' - the Holocaust,” he said.

Israel has killed more than 30 Palestinians, including four children and a baby, in the past two days amid a dramatic escalation of the cross-border war. Palestinians have fired close to 130 rockets in the same period, killing one man on an Israeli campus.

Israeli defence officials said that preparations for a large-scale ground offensive to storm Gaza and break Hamas have been completed, but that they are waiting for improved weather conditions to begin what many predict would be a hugely bloody offensive into the crowded streets of Gaza’s cities and refugee slums.

Many observers worry that Israel could be dragged back into a costly, long-term military occupation of Gaza, which may not even halt the rocket fire. Militants have been firing them for seven years, while Israel only ended its occupation of the Strip two years ago.

“We’re getting close to using our full strength. Until now, we’ve used a small percentage of the army’s power because of the nature of the territory,” Mr Vilnai said.

Ehud Barak, the Defence Minister, was reported in the Israeli media to have sent messages to world leaders giving warning of an impending conflagration in Gaza, but insisted that Hamas’s endless rocket attacks have left Israel with no choice but to attack. “Hamas bears responsibility for this deterioration and it will also bear the results,” he said.

Thousands of Gaza residents rallied after Friday prayers to protest against the increased Israeli raids, with children holding up placards saying “They’ve killed my right to childhood.”

Ismail Haniyah, the dismissed Hamas Prime Minister who has largely avoided public appearances for fear of being a target of Israel, warned worshippers at a mosque that they were looking at open conflict.

“Gaza today faces a real war, a crazy war led by the enemy against our people,” he said, condemning the Arab world’s silence over the escalating violence and accusing it of “encouraging the Israeli aggression”.