The Prime Minister's Office announced late last night that PA chairman Mahmoud Abbas had informed Olmert that all the Palestinian terrorist factions had agreed to stop all hostile Gaza-based activities against Israel. These included, Abbas said, tunnel-digging, suicide bombers, and Kassam rockets. Israel agreed in return to remove all its forces from Gaza.

All IDF forces were withdrawn from Gaza in the course of the night - and shortly afterwards, two terrorist groups announced they were not parties to the ceasefire agreement. Islamic Jihad and the Abu Rish Brigades of Fatah declared this morning that they would continue firing rockets at Israeli citizens.

In the meanwhile, three rockets hit the besieged city of Sderot and environs around 8 AM, and another Kassam was fired at the Eshkol region of the Negev. Sderot residents, whose great hopes of rocket-less tranquility to which they awoke were dashed with the crash of the rockets, took to the streets once again today. They burned tires and shouted angry epithets against Prime Minister Olmert and his government.

Shortly before 10 AM, a fifth rocket slammed into the town, but causing no physical damage.

Prime Minister Ehud Olmert said later this afternoon that the IDF would not, at the present time, respond to Kassam rockets fired at Israel. PA forces - not including those of Hamas - were ordered this afternoon to deploy in northern Gaza to prevent Kassams.

At 5:40 AM, just before the ceasefire came into effect, a Kassam rocket caused significant damage to a house in Sderot; the family had responded quickly to the Color Red warning alert, finding refuge in a protected room in the house.

Yesterday, over the Sabbath, PA terrorists scored a direct hit on a house in Sderot. The family had left town for the Sabbath. A Kassam rocket fired from northern Gaza crashed through the roof, causing major damage in a house located next door to the home of Mayor Eli Moyal.

MK Benny Elon, head of the National Union/National Religious Party party, accused Olmert of trying to deceive the public with an agreement that will "explode in our faces," and that the only solution is for the IDF to conquer Gaza. New government member Strategic Affairs Minister Avigdor Lieberman said that only an Israeli threat to target the heads of the terror organizations will work.

Vice Premier Shimon Peres, on the other hand, said that the ceasefire agreement was a fine achievement. "It is a positive development, but not the final move," he told Israel Radio this morning. "Let us not exaggerate its importance, but it should not be derided... It is an achievement for Israel, for Ehud Olmert and for his government."

Defense Minister Amir Peretz held a consultation with defense leaders this morning regarding the developments in Gaza. He told his colleagues that though Israel is interested in a calming-down period, it will not accept attacks on its citizens.

Foreign Minister Tzippy Livny told Army Radio this morning that the "next few hours" will be a form of a test of the PA leadership to see if it can rein in the terrorist organizations.

Hamas leader Khaled Meshaal and Hamas spokesman Raza Hamed say Israeli soldier Gilad Shalit is alive. Shalit was abducted by Hamas terrorists into Gaza five months ago, and no international or Israeli elements have seen or heard from him. Two soldiers were killed during the kidnapping.