The Security Cabinet unanimously agreed shortly after noon Wednesday that Hamas must free kidnapped IDF soldier Gilad Shalit before Israel can agree to another ceasefire or open Gaza crossings to commercial traffic.
The decision puts the ball back into the court of Hamas, which has insisted that the soldier will remain in captivity until Israel comes to terms for another truce.
The government and Hamas, through Egyptian mediators, agreed last June to a ceasefire that was supposed to lead to the release of Shalit, who was kidnapped 969 days ago.
However, Hamas immediately broke the truce by firing rocket and mortar shells at the Negev while Prime Minister Ehud Olmert ordered the IDF not to retaliate until last November, when the rockets reached increasingly closer to Tel Aviv.
The military response failed to stop Hamas, and the government eventually allowed the IDF to launch Operation Cast Lead in late December, invading Gaza but then declaring a ceasefire and withdrawing after three weeks.
During the truce declared in June, Israel closed the Gaza crossings whenever rockets struck. However, the government recently has reversed itself and now allows aid to cross into the region while relying on targeted air strikes as retaliation for continuing rocket attacks and mortar shelling.